1. SENATE CONFERENCE 2013

2. SASFIN WEALTH
• As a division of the Sasfin Group,
Sasfin Wealth has for over 120
years been providing trusted
advice and wealth management
solutions.
• We have a national presence and
consult to and manage in excess
of R70 billion.

3. FOOTPRINT
Hong Kong
Pretoria
Johannesburg
Bloemfontein
Durban
Port Elizabeth
Cape Town
George

4. Investment team

5. Investment Process

6. Competitive advantage
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Experienced investment team
Superior ability to read markets
Adaptive investment style
High conviction
We optimise risk adjusted returns by consistently adding increments
of return

7. Awards
2012: Raging Bull
broad-based Domestic Equity Fund on a straight performance basis, being the
• Best with the highest Profile Data total investment return ranking over three years in
fund
the ASISA Domestic Equity General, Value and Growth sectors
2012: Raging Bull
• Best Domestic Equity Value Fund

12. Sasfin Securities
• Our heritage dates back to 1890 when Otto Pollock became a
member of the JSE.
• Today we have in excess of R60 billion of assets under
administration which makes us one of the largest and most
experienced private client stockbroking businesses in South
Africa.
• We pride ourselves on our ability to offer truly bespoke
investment solutions both locally and internationally, coupled
with uncompromising levels of client support.

13. We identified 6 traits which are non-negotiable when it comes
to successful investment management.
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Relationship: The successful investor interacts and builds a sound relationship with
an investment professional that truly understand their needs and carefully
manages the emotional aspects of investing.
Independence: The successful investor chooses an advisor whose independence is
unconstrained by investment bias.
Trust: The successful investor invests with a wealth management company who
they can trust – an entity that has a solid reputation and extensive history of
successful wealth management.
Expertise: The successful investor entrusts their wealth to capable and astute
professionals who have the ability to navigate through difficult market cycles.
Simplicity: The successful investor has a clear understanding of their portfolio and
related fees. They steer clearfrom opaque investment products that aren’t fully
understood.
Global: The successful investor requires a globally diversified portfolio which is
managed locally.

14. Offering
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Full Discretion: Sasfin assumes full responsibility for the management of the
underlying portfolio.
Referral managed: Sasfin advises on the underlying securities while the client is
ultimately the decision maker.
Deal & Execution: Our clients will be required to formulate and implement their
own investment strategy.
Offshore: Our global trading platforms and international research allow us to think
globally while executing locally.
Personalised share portfolio: We manage your client’s compulsory and voluntary
money in a tax effective manner.

15. Foundation Portfolios
• Foundation Fund Fact Sheets
• Client proposal

16. Our offering is available through:
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Glacier & Glacier International (Sanlam)
Investec
Momentum
Old Mutual International.

17. Thank You

18. DISCLAIMER
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This presentation has been compiled by Sasfin Financial Advisory Services (Pty) Ltd - Co. No.1997/010819/07; a
licensed Financial Services Provider - FSP No. 5711 (use the one or other as appropriate)
Sasfin Asset Managers (Pty) Ltd - Co. No. 2007/018275/07; a licensed Financial Services Provider - FSP No. 21664
in the context of the services it provides. The contents are proprietary and may not be copied or disclosed
without consent. Information and opinions are general and subjective in nature and do not constitute
advice. Any references to historical data, assumptions, targets, benchmarks or examples are as indicators /
illustrations only and are not fixed or guaranteed. Past investment performance is not necessarily indicative of
future performance. While care is taken to provide current and accurate information, no liability is accepted for
errors, omissions or subsequent changes and this presentation remains subject to revision, verification and
amendment without notice and without liability to compensate or reimburse any party. Anyone acting on this
presentation before taking appropriate advice does so at their own risk

19. World Markets
Balancing the risks

20. Shut happens!

Past few weeks underscored by the debt ceiling debate,
improving economic numbers and talk of tapering

Tea Party echoing same thinking Republican moderates have
expressed for years, except at higher volume
Abhorrence of ObamaCare, loathing of government, faith in tax cuts and
free market etc.

Tactics nearly forced US default

Caused grievous harm to Republican brand – 53% of
Americans blamed Republicans versus 29% Obama

Damaged Republicans’ business leaning image

Sequester lowered growth – Grand Bargain on spending
cuts sought

Shutdown and debt ceiling protests hurt business
confidence – cost of shutdown estimated at $24bn

Tapering delay until there is clear evidence that the economic
recovery is on a sustainable path
20

21. US economy – chugging along

Employment rising
24 months of successive job increases
Oct job numbers well ahead of consensus

Housing recovering
New houses sold double 2011 lows

Retail spending improving
Above pre-crash levels

Trade balance shrinking
Half ‘08 highs of -$70bn

Budget deficit falling
An increased level of tax receipts and lower government spending

Oil & gas production exploding
US fastest growing producer in 2012 lifting output by 1m barrels per day to 8.9m

Lower birth rate projections, aging work force and slowing productivity
Gains likely to reduce GDP to 1.9% between 2012 and 2032 from post-war average of 3.5%
21

22. S&P500
1990 - 2000
Tech revolution
Globalisation
Cell phone
Internet
2000 - 2010
GFC (Collapse of Lehman)
China emerges
9/11 crisis
2010 - 2020
End of commodity super cycle
Shale, oil, gas revolution
IT & communication transformation
3D printing, big data
Aging demographics: US, Japan, China, Europe
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23. What the Frack ?

24. Hydraulic Fracturing
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25. The Natural Gas Revolution
 Fracking has allowed energy companies to dig deeper than
before unlocking unconventional oil deposits
Crude Oil net Imports
 North America has largest stores of unconventional oil
50% more than total conventional crude in the Middle East
 US could overtake Saudi Arabia as the world’s largest oil
producer by 2020
Crude Oil net Exports
 Making it less dependent on oil from foreign nations whose
interests conflict with theirs
 Imports are down to 40% from 60% in 2005
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26. The Natural Gas Revolution
 Fracking has produced an abundance of inexpensive natural gas
 Natural gas used to power ships, trains, heavy goods vehicles and
power stations
 Natural gas power stations have half the emissions of conventional BNSF carry 650k barrels
coal plants
a day, soon to increase to
Emissions fallen 12% since 2007 on conversions
750k barrels a day, will
 Boom in oil and gas drilling creating jobs in states hard hit by
recession
eventually reach over 1m
barrels a day
 Cheaper energy input costs attracting manufacturing back to the US
1m manufacturing jobs could be added by 2025
 Plentiful oil will diminish incentives to reduce reliance on fossil fuels
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27. Global Economy
Size of economy
US
21.6%
China
10.4%
EU
26%
Japan
8.4%
Brazil
3.6%
UK
3.5%
Russia
2.6%
Est. growth 2014
China
8.2%
India
6.2%
Russia
3.8%
Brazil
4%
US
3%
Australia
3%
UK
1.5%
Europe
1.1%
World
4.00%
Emerging Regions
5.70%
Advanced Economies
2.20%

28. Europe’s deficit problem
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29. Europe: signs of economic recovery are visible

Recovery still fragile – deflation becoming the biggest danger

Euro zone expected to
expand by 1.2%
Forecast growth for 2014 at 0.5%
Short of the pace needed to head off deflation & address the on-going debt crisis

Germany and France slowing but Italy and Spain performing better

Spain, Italy & Portugal also showing economic gains
Spain out of recession, growing at 0.1% in Q3

EU needs to increase growth potential, enhance job creation &
boost European competitiveness

The origins of the disaster lies with excessive private borrowing

Euro zone blighted
Greece got into trouble because its government spent too much anddebt even more thanby private
Govt debt
collected too little in taxes

The bust followed a private sector binge: mortgage debt in Ireland
and Spain, corporate borrowing in Portugal and Spain

Without growth, zombie firms are unable to invest or grow
Much like those wafting through Japan in the 1990s
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30. UK: economy accelerates to fastest growth since 2010

UK economy growing at its fastest rate in 6 years

Unemployment at 3 year low

Recovery beginning to take hold

2013 growth upgraded to 1.6% from 1.4%

Forecast growth 2.8% for 2014

Interest rates could begin rising sometime in 2015, once
employment falls to 7%

“The economy is growing
robustly as lifting uncertainty &
thawing credit conditions start
to unlock pent up demand”
Mark Carney
Governor BOE / Chairman MPC
Unlikely that the recovery will fade significantly:
- Revival of the British housing market
- Youth unemployment falling
- Confidence returning
- Obstacles home and abroad remain
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31. Japan: “Abenomics” a mix designed to jolt the economy
CPI
Japan’s economy will remain on track as the
government prepares a 5 trillion yen ($50.6bn)
stimulus package to offset the drag from a sales
tax increase scheduled for next April.
Economists expect the majority of the stimulus
package to be spent on infrastructure and tax
breaks for the corporate sector.
Reuters
31

32. Electrifying a nation that had lost faith in its political class
Nikkei
Japan’s economy recovering at moderate pace
despite slowing exports
Imports likely to remain strong due to solid
domestic demand, while business sentiment is
improving

33. Emerging Markets continue to disappoint

China grows at the slowest pace in 13 years

Indian Rupee falls to record lows – rates rising to stem outflows

Brazil’s fundamentals deteriorate on incoherent economic policy

Russia down on falling energy prices and tight corporate credit

Investors continue to withdraw from emerging markets even in the
face of Fed tapering talk
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34. S&P500 vs MSCI Emerging Markets Index
Emerging Markets
Developed Markets
“Investors looking for
emerging market-like growth
rates should look to the US”
Meredith Whitney

35. China’s tectonic shift – the dawn of a new era

New regime acting more carefully, balancing growth, shifting
from a production oriented economy to one centred around
household consumption

Third Plenum:
Supported land reform, fiscal reform and judicial system
Disappointed on financial liberalisation, one-child policy & residency reform
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Demand slowly recovering, expect growth around 7.5%
Structural reforms designed to improve the supply side of the •
economy

Reforms would help sustain the growth of productive capacity, •
improving the allocation of capital and labour

Cutting red tape and other regulatory barriers to entry would
help private firms invest in industries now dominated by state- •
owned enterprises
Consumption expected to overtake investment as the largest contributor to GDP
Investment
42% (2010 – 2020)
34% (2020 – 2030)
41% (2010 – 2020)
51% (2020 – 2030)
+ 24%
Household consumption
accounts for 38% of GDP
(US ~70%)
World’s largest car market,
19.3m cars sold in 2012
•
Largest internet market in
the world
•
Reduced the per-watt cost of
solar power from over $3
(2008) to under $1 (2011)
Consumption
- 23%
Home to 20% of the world’s
population

36. China’s growing middle class is demanding more
Western brands sell a lifestyle / image aiming
to attract the aspirant Chinese consumer
McDonalds
Haagan-Dazs
Nike
Adidas
Starbucks
Paul Frank

37. South Africa
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Widespread labour unrest disrupting mining and manufacturing output
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Falling commodity prices putting pressure on mine earnings

Rising input costs, electricity constraints, squeezing manufacturing
margins

Slowdown in household spending

Continued shift in fiscal policy to social spending from infrastructure

Corruption, poor skills, inefficiency
WEC ranks SA’s education system 146 out of 148 countries and last in Maths & Science

Hesitant domestic and foreign investor confidence

Pessimism about the long term outlook for the economy

Debt downgrade possible if deficits continue to deteriorate
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38. JSE trading at all time highs

39. Breakdown of the JSE: +23% from 1st Nov 2012
The top 15 companies make up over 70% of the JSE (12 month return)
Market cap (ZAR)
1.1 tr
British Am Tobacco
25%
SABMiller
859 bn
Billiton
655 bn
Richemont
536 bn
Naspers
385 bn
69%
MTN
368 bn
29%
Anglo American
335 bn
-11%
Sasol
328 bn
37%
Standard Bank
203 bn
19%
Firstrand
202 bn
29%
41%
12%
85%
Vodacom
172 bn
158 bn
137 bn
129 bn
Pick ‘n Pay
23bn
Telkom
14bn
Adcock
12bn
JD Group
-21%
Barclarys
Market Cap
36%
Kumba Iron Ore
Market cap: R714bn
9%
Old Mutual
Xstrata/Glencore
7bn
9%
124 bn 75%
Aspen
0
200000
400000
600000
800000
1000000
1200000

40. Local Investment Ideas: Stick with the winners
Companies expanding offshore into high growth regions
Naspers, Aspen, Bidvest, BHP Billiton, Sasol, Glencore
Emerging market consumption growth
SABMiller, British American Tobacco, Richemont
Superior retail business models continue to hold
Famous Brands, Woolworths, Mr Price
Expansion into Africa
Imperial, MTN, Omnia, Shoprite
Expanding middle class exploring medicare options
Life Healthcare, Mediclinic, Discovery
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41. JSE is more of a convenience store than a supermarket
JSE
Global Markets
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42. Create a champions league portfolio
JSE
Global Markets
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43. A guideline to our team’s offshore investment ideas
Escalating prosperity in developing nations
LVMH, Daimler, Prada, BMW
Increasing urbanisation
L’Oreal, Altria, Anheuser-Busch InBev
Competitive companies focusing on the consumer
Nestle, Unilever, Adidas, J&J
High yield in a low yielding environment
Royal Dutch Shell, AstraZeneca, Sanofi, Allianz, Vodafone
America: The next emerging market
General Electric, Wells Fargo, JPMorgan, Berkshire Hathaway
IT: Tech players transforming our lives
Google, Amazon, Microsoft
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44. Thank You
David Shapiro
Kavita Patel
Craig Diesel
Carmen Solomons
Deputy Chairman / Director
david.shapiro@sasfin.com
Portfolio Manager
kavita.patel@sasfin.com
Portfolio Manager
craig.diesel@sasfin.com
Portfolio Assistant
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carmen.solomons@sasfin.com