Ninety One Plc · LSE:N91
Ninety One — Peter Kent webinar, 3 November 2020
12 slides from Ninety One's conference presentation, November 2020
Slide 1: What a year it has been…
What a year it has been… Peter Kent November 2020
Slide 2: Important information
Important information All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such i
Slide 3: What a year it has been …
What a year it has been … … Pandemic => bonds worst month ever => SARB intervenes => bonds bounce back (sport still cancelled) That was traumatic, it’s all back to normal, right? Source: Bloomberg, Ninety One as at 28 October 2020 Confidential | Ninety One 3
Slide 4: Ninety One Diversified Income Fund
Ninety One Diversified Income Fund Annualised performance in ZAR as at 30 September 2020 Diversified Income A Inc Diversified Income H Inc STeFI Composite (ALBI 1-3 years pre 01.07.2011) (ASISA) South African IB Money Market 8.0% 8.1% 7.8% 7.6% 7.6% 7.4% 7.2% 6.9% 7.1% 7.1% 6.5% 6.4% 6.0% 6.2% 6.2%
Slide 5: If you’re looking for inflation beating income, 2013…
If you’re looking for inflation beating income, 2013… … when the Fed was last doing QE, was arguably a riskier time than now Yield curve in the middle of 2013 Yield curve now 12% 12% 11% 11% 10% 10% 9% 9% 8% 8% Yield Yield 7% 7% 6% 6% 5% 5% 4% 4% 3% 3% 2% 2% 0.25 3 5 7 10 15 20 30 0.25 3 5 7 10 15 2
Slide 6: Rates lower for longer…
Rates lower for longer… Inflation is subdued under most scenarios 15% 12% 2020 inflation scenarios Rand 14% 11% 16.4 17.4 17.9 18.4 18.9 19.4 19.9 20.4 13% 22.4 2.1% 2.4% 2.5% 2.7% 2.9% 3.0% 3.2% 3.3% 10% 27.4 2.2% 2.5% 2.7% 2.9% 3.0% 3.2% 3.4% 3.5% 12% 32.4 2.4% 2.7% 2.9% 3.1% 3.2% 3.4% 3.6% 3.7% 1
Slide 7: There are signs of stress out there…
There are signs of stress out there… …with the government borrowing rates higher than banks, and future inflation pricing at 9% Government and banks borrowing costs over time Inflation compensation priced into the bond market 11% 10% 9.13% 8.75% 9% 10% Cost of borrowing for 5y 8% 7.47% 9% 7% Inflati
Slide 8: The fiscus is very vulnerable…
The fiscus is very vulnerable… …with the market pricing somewhere between the “passive” and “active” path Gross debt to GDP 120% 114% The market is priced somewhere in here: 110% 106% 100% 97% 93% 95% 90% 90% 90% 86% 82% 86% 87% 87% 80% 82% 70% 64% 72% 69% 60% 66% 62% 57% 50% 53% 49% 51% 47% 40% 201
Slide 9: MTBPS: worse numbers, better mix
MTBPS: worse numbers, better mix Fiscal deficit changes: Feb => June => October Planned expenditure cuts: Feb => June => October More -147 -147 wage cuts -368.0 -366.4 49.6 -359.3 65.5 -6 -39.7 -226 -192.6 -203 -46 Rbn Rbn -220.7 -486.4 -537.5 -300.1 Less cuts -707.8 overall FY20/21 FY21/22 FY22/23
Slide 10: You can’t be too bearish the rand
You can’t be too bearish the rand It’s a battle between current and capital accounts Current account will be improving… … foreign flows won’t 25 75 40000 30000 70 20000 20 65 10000 0 60 15 -10000 55 -20000 50 -30000 10 -40000 Foreign ownership is Terms of trade (LHS) 45 now only 29% -50000 Trade wei
Slide 11: Ninety One Diversified Income Fund
Ninety One Diversified Income Fund Current positioning: Still defensive, measured duration and underweight property ‒ No growth, no inflation: cash rates will remain low 100% Overweight Underweight Current ‒ Fiscal better than feared: expenditure targets are (too) ambitious 75% ‒ Reforms, execution
Slide 12: Thank you
Thank you www.ninetyone.com