3.     Local & Global Investment Interest Returning - With one notable exception [Mr Price] we are seeing businesses such as Tiger Brands, Spar, and Remgro divesting from their far-flung offshore assets and strategically refocusing their organisational resources on their core South African assets and local growth opportunities. Interestingly, the recent negative share price reaction of Mr Price to their disclosed offshore acquisition is a strong market signal that directors of listed companies and their corporate advisors pay close attention to.

We also continue seeing global corporates opportunistically acquiring South African businesses outright, for example Canal+ buying Multichoice, Zahid buying Barloworld, Henkel buying Nordbak, Coca Cola buying Coca Cola Beverages Africa, BHP Billiton trying to buy Anglo American, and it then merging with Teck, and Natco Pharma buying out Adcock Ingram minorities.

Following the significant strengthening of anti-corruption measures and recent removal of South Africa from the international FATCA grey list, and ratings agencies shifting back towards an investment-grade rating, we have also started seeing the first signs of renewed interest from global institutional investors in the South African markets, including in-country research visits.

Finally, the property market, commodity prices, stock market, bond market, and the currency have all been relatively strong.

The South African Investment Opportunity & Thesis Remains Intact - Sensible investors pose the question, how do we achieve investment returns? At Perspective, we begin this process by identifying terrific long-term growth businesses led by trustworthy people, and by insisting on paying a low price for them in relation to their intrinsic real world business value. Once our funds own them, their future long-term investment returns can only come from three places: One, from dividends received from them over time. Two, from long-term growth in their business fundamentals [revenues and profits per share]. Three, from a positive rerating of said business fundamentals by all market participants collectively.

Informed by our own independent research on a business by business basis, we find that each of these three future long-term return sources remain intact today. Our selected JSE listed businesses are paying us a high starting dividend yield; they continue growing their per share fundamentals; and they have not yet been rerated.

I acknowledge it is early days, and I am mindful not to naively confuse my sincere hopes for and love of South Africa with objective reality. The reason we are paying attention to the shifting mood is because it can influence the confidence and willingness of businesses, individuals, and offshore investors to invest – be it in capital projects or the investment markets. In turn, these capital and investment flows, should they occur, will enhance growth in business fundamentals as well as a markedly positive rerating.

Our work continues...