- FLAGSHIP OFFICES DURING S.A. LOCKDOWN -
Please note that all Flagship employees are working remotely during the Covid-19 lockdown.
Should you need to contact us, please use the following contact details:
or the following people during office hours:
Fund managersRead more
24th March 2020
Economic impact of the Coronavirus
The spread of the Coronavirus and the containment efforts being put in place continue to impact global economic activity in the month of March.
The quarantine (or ‘lockdown’) procedures being implemented throughout Europe and the United States (and now in South Africa) are expected to continue into April, and will deeply impact supply chains, consumer and business demand, as well as stock markets. We expect that this will lead to a contraction in GDP for the first quarter of 2020, and perhaps the second quarter as well.
As you can imagine, there is virtually no business untouched by the contagion. Businesses focused on leisure, travel, hospitality and tourism are naturally the most deeply impacted, but a ‘sudden stop’ in economic activity is not something any business can prepare for. Many small businesses will need to close their doors, people will lose jobs, and profits for the 2020 financial year across all economies will be lower than previous years.
The examples provided to us from Asian countries, as well as certain pockets of Europe and the US, show us that the efforts in place by government and civil society will eventually work in curbing the virus.
Wuhan and Italy
Yesterday, Wuhan, the original epicentre of COVID-19, ended quarantine. Transportation will now resume on April 8 and people will be allowed to leave the province. The province of Hubei (in which Wuhan sits) reported zero new infections since March 19, a significant reduction since the height of the epidemic.
As we write, the infection rate in Italy, a country ravaged by their sluggish reaction to the virus, has begun to slow. In the rest of EU5 both France and Germany saw substantial increases in the recovery of patients, which slowed the increase in active patients in both countries which was also positive.
We know that the quarantines will pass. It may take longer than people expect, but history shows us that by this time next year we will be talking a lot less about the virus.
We also know that governments around the world are doing their part to contain the negative economic effects of the lock downs. Many businesses will receive assistance either directly by the government (tax assistance, labour subsidies, furloughs, etc.) or via their balance sheets (debt holidays, relief, and lower interest rates).
From 1929 to 1933, the US economy shrank by one-third, unemployment jumped to 25% and the stock market fell 80%. Poor response by governments and central banks during this time was a leading cause of the depth and duration of the Depression. Lessons from this time have been learned, and were applied during the global financial crisis of 2008 and are being applied to the current crisis.
We also know that some businesses will emerge stronger. For example, the brand building that Dettol, a brand owned by fund holding Reckitt Benckiser, is getting in this environment is tremendous – we’ll be telling our grandkids of how we sanitized with Dettol! Leveraged craft breweries that survived on strong consumer demand will struggle but Heineken will thrive due to its global diversity, and also because their strongest competitor Anheuser Busch-Inbev is being hamstrung by debt. Online Gaming companies will find new customers during this period, and consumer demand for Disney’s new streaming products will grow far faster than previously expected.
It is worth reiterating that stocks are worth owning for the long term. Stocks remain an important part of the world’s long-term savings, and they continue to present the best alternative available to those that want to build wealth. They will continue to look relatively attractive after the crisis.
The Flagship global investment team focusses on allocating investors’ capital to the highest return assets in our mandated universe, without taking undue risk. This has been achieved over 19 years, including periods with heightened market volatility and economic contraction.
The current uncertain environment allows us to deploy this strategy to protect your investments and to position our Funds for growth in the future.
Risk management is not only a consideration during times of stress. It is embedded in the way we build portfolios every day, and is at the forefront of our decision making. We remain diligently focused on the macro environment and your investments, and stand ready to respond to any further developments.
How to contact us during the lockdown
From a business point of view, Flagship will be fully operational during the 21 day lockdown period. All staff will be working remotely from home with effect from Friday 27th March, and have the necessary infrastructure, systems & technology to provide uninterrupted investment management and service to all our investors.
Contact details for any queries or requests should be sent to:
Candice Scholtz (head of Flagship administration)
cell number: 083 317 6258
Gabi Hough (portfolio managers’ assistant)
cell number: 083 356 0108
Simon Hudson (CEO)
cell number: 083 287 6346
Wishing you the very best of health (and patience) over the next few weeks…
Quarterly Telescope Q1 2020
Welcome to our latest QUARTERLY TELESCOPE. We hope these quarterlies provide you with greater insight into our thoughts on global assets as well as how our global funds are being managed. In this quarter’s Telescope, Kyle Wales and Pieter Hundersmarck discuss how our portfolios are positioned to weather the COVID-19 crisis, and Kyle Wales discusses … Continued
Are you investing enough offshore?
By Kyle Wales As published by Glacier on March 27, 2020 The answer to this question has experts divided. Some believe that, with the multitude of political and economic issues South Africa is currently experiencing, investors should be taking as much money offshore as possible. Others are of the belief that South African assets offer … Continued
Why bigger funds are often not better performers
By Kyle Wales 8 March 2020 Few dispute the power of a strong brand. During a trip to the supermarket we place a bottle of branded tomato sauce into our trolley instead of the supermarket’s private label brand, even though it is more expensive. This though the taste of the private label brand may be … Continued
March 2, 2020 Dear Investor, Many of you are aware of the coronavirus that began in China and has now expanded to other countries around the globe. The coronavirus disease (COVID-19) was first reported in Wuhan, China, on 31 December 2019. Initially the bulk of cases and fatalities were confined to China, but the virus … Continued