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What does the future hold in 2010?
There is no doubt that we have experienced a very challenging year in 2009, with people across our country having less of disposable income than usual at this time of year.
Market observers have also estimated that we have shed a million jobs this year alone and in the middle of this year it appeared that there was a general lack of liquidity, with banks becoming increasingly risk averse to lending.
Speaking to a banking acquaintance of mine recently I asked why it appeared that banks had put such a stringent hold on lending and credit lines. Yet, he said on the contrary, banks were indeed offering credit to many companies but the companies themselves were not utilizing their lending mechanisms and were in a holding pattern of' wait and see' in their spending.
So, the truth appears to be that we have been experiencing a Catch 22 situation with companies cancelling or postponing expenditures because they in turn are waiting for the return of a stronger consumer demand to the market.
But the wheel always turns and what goes down must come back up again. Government spending on infrastructure at a massive R750 billion over three years is already starting to kick start growth throughout the private sector and this coupled with the 2010 FIFA World Cup is definitely good news for our economy moving forward.
There is a general cohesion emerging from both this government spending and the pressing need for municipal service delivery which will create a positive and sustainable momentum as we ensure our infrastructure in roads, public transport and energy contribute to a successful World Cup. Green shoots are already emerging now and will continue into next year.
We are already seeing increased spend and supply orders from companies in sectors like mining, agriculture, transport and manufacturing.
This increased spending trend is expected to increase and accelerate into 2010. Of course; this is not to mention sectors that are already benefiting from the 2010 FIFA World Cup like construction, tourism and hospitality which in turn are having a positive knock on effect towards the property sector.
Despite the fact that the property sector tends to lag business cycles by 12-18 months the positive effects of this economic growth will benefit the property sector tangibly by the end of 2010 and well into the first half of 2011.
Prudent equity investors should be looking at alternative energy investment in the areas of power generation including nuclear, solar, wind and tidal energy creation.
This is especially relevant now with the current negotiations at Copenhagen reaching a head this month and setting a more globally responsible and sustainable investment tone for the years ahead.
Investment in telecoms and IT infrastructure will also be a wise investment choice while precious metal resources like platinum for example are experiencing a resurgence and will continue to offer solid returns in the near future and moving into 2010.
Very truly yours
Litha Mveliso Nyhonyha – Executive Chairman
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