File photo: Nadine Hutton. File photo: Nadine Hutton.
Durban - As the country braces for a likely economic downgrade, an Eastern Cape economist has warned Durban investors: “Don’t invest in the rand - get some exposure to foreign currency.”
Rex Cowley, the founding member of the Overseas Trust and Pension company, gave a warning to Durban’s wealthy residents yesterday to turn to offshore investments to save their wealth and not go down with the country’s economy.
Read: Obstacles loom for SA's economy
He said that over the past 18 months the value of the country’s wealth had been depreciating by more than 50% compared with that of the US, the UK and Europe.
“We have become significantly poorer as global citizens, and that is the issue that will continue to affect us,” he said.
According to Cowley’s profile on his company’s website, he has 21 years of experience in the wealth management industry, and has worked for financial institutions such as Close Brothers, JP Morgan Fleming, the Royal Bank of Canada, Sanlam and Standard Bank.
He was addressing about 50 of the city’s citizens at the Durban Country Club on the topic “How will SA survive a looming crisis”.
Cowley said investing in the local economy was risky because of the lack of stability. He said local investors should rather consider investing in dollars or euros.
Even the Reserve Bank had expressed concerns that the country’s getting a credit downgrade appeared to be inevitable.
Cowley said there were options to escape the junk status that might cost them their wealth.
“So if the country does decide to go the wrong way and you decide ‘This is not working for me’, there are solutions.”
He said fixing the country’s economy could not be done in the short term.
“The reality is that the political policies are opposed to economic growth. There is not going to be a short-term fix, there is no silver bullet to change the economy to see growth stimulated in the country.
“We think that a credit downgrade is probably going to be inevitable.
“The big question for us in the wake of this uncertainty is: How does one try to create certainty in respect of one’s own personal possessions?” Cowley said.
Urging investors to seek professional advice, he asked: “What do we do practically to try to secure our own possessions?”
bongani.hans@inl.co.za
THE MERCURY