No sooner had Finance Minister Godongwana shut down his presentation of the National Budget than it was announced that South Africa would be placed on a watch-list of countries not doing enough to combat illicit money flows and terrorism financing.

The so-called ‘grey-list’ of the Financial Action Task Force (or FATF) is a stern shot across the bow that demands significantly more be done to roll-back the corruption and money-laundering committed during the years of State Capture, including right up to this day. In short, the ANC government is still guilty of turning a blind eye to protect implicated politicians and connected individuals who should, in fact, be standing in the dock facing serious charges, and sitting in a 1.8 x 2.4m cell wearing orange overalls!

Last week e.tv’s Annika Larsen lit up the airwaves in her interview with Mr Andre De Ruyter as he laid it all out on how deviously his political masters are in aiding and abetting grand-scale theft at the ailing power utility. The interview did little to help the PR campaign of President Ramaphosa’s supposed ‘reform’ agenda – as political commentator Daniel Silke so aptly summarised it:

“Implicating two serving members of President Ramaphosa’s executive places President Ramaphosa in a most awkward position. Reappointing them only to have the allegations exposed will severely embarrass him. While excluding them will effectively name them. No wonder there are delays in announcing the much-awaited new Executive.”

Roll on the growing, grey elephants in the room!

After the strong start to the year, markets took a bit of a breather in February as we digested a myriad of mixed economic data – inflation in the US is slowing, but less than expected; strong jobs data; and record retail sales in the world’s largest economy all added to expectations that interest rates will likely continue going up … a sign of a bit more pain before things get better.

Locally, the Finance Minister’s knife-edge Budget was broadly well-received with markets responding positively to the proposals put forward. While the US Dollar continues on its path of strength and outperforming every other currency on the planet, we cannot ignore South Africa’s own-goals that have certainly wrought some weakness – loadshedding, grey-listing, and a weakening local economy. While these probably account for some 50c to 75c of the Rand’s negative movements against the US Dollar, the vast majority of the currency’s slide this past year are those of Dollar-strength more than actual Rand-weakness.

Looking ahead into March and the second quarter, the situation remains one of “All eyes on the Fed” as we watch for clues on upcoming interest rates and the risks of the FOMC driving the economy into a recession – will it or won’t it? Only time will tell!

The Octagon portfolios delivered respectable returns in the month where markets trended negative, helped by the compelling yields on South African fixed interest assets and the currency-hedging of offshore assets and local Rand-hedge stocks. We anticipate short-term volatility to remain yet are excited by the prospect of attractive, longer-term upside which appears significant from these levels.

As we approach the end of the first quarter of the year without a reshuffled cabinet or new Minister of Electricity, still no solution to loadshedding or an end to the Russia-Ukraine war, remember the words of the famous German philosopher, Georg Hegel, who said, “The only thing that we learn from history is that we learn nothing from history.”