Offshore 30% cap effectively lifted

Vox Populi Vox Dei

Vox Populi Vox Dei

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A seemingly nondescript change to regulations has effectively resulted in the biggest relaxation of exchange controls in South Africa’s history.

The move, announced last month in an explanatory note put out by Treasury in the Medium-Term Budget Policy Statement has lifted the cap for South Africans to trade in foreign assets.

“All debt, derivatives and exchange-traded instruments referencing foreign assets, that are inward-listed, traded and settled in rand on South African exchanges, will be classified as domestic. The classification of all inward-listed shares denominated in rand remains domestic.”

This means if a locally-listed firm holds offshore assets, there is no longer a limit to how much they can hold, as long as they trade these assets locally and in rand.

Mike Schüssler chief economist at economists.co.za says this seemingly ordinary statement is very far-reaching.

The change is huge because it effectively does away with foreign investment caps of 30% if the investment is listed locally and is traded in rand. This means local pension funds, which collectively have an asset pool of around R4 trillion – pending the aforementioned provisions – are no longer limited in how much they can invest abroad.
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www.moneyweb.co.za

Offshore 30% cap effectively lifted

'This is the biggest relaxation of exchange control this country has ever had' – economist Mike Schüssler.
www.moneyweb.co.za www.moneyweb.co.za
 
I'm conflicted. My final section 14 transfer confirmation sms came through today and this would've saved me so much effort working out what percentage went where.
 
Well, if that is true that no more REG28 ... then I am moving all my pension abroad (in RANDS)
 
Well, I wouldn't get too excited just yet. It's true that Reg 28 does define its cap on foreign assets in terms of SARB's definition of what a foreign asset is. Which has now changed. BUT, and this is a big but, it also says "or such other amount as may be prescribed". I'd wait for the other shoe to fall.
 
I chatted to a pro now ... and he said according to him, nothing changed.

The said, all good and well but read this line "This move does not apply to offshore investments that are directly held or holdings on foreign exchanges, as no changes were made regarding those caps under Regulation 28 of the Pension Funds Act."

And he said the guys over 55 can move 100% abroad, that aint new news either.

So lets see!

If anyone can confirm with their savings provider (lets keep everyone updated).

Ok ... some info:
"ETF’s are no longer classified as foreign assets. They are now classified as “inward-listed ETFs” as “domestic” assets. The effect of this is that these inward-listed ETFs no longer form part of a retirement fund’s 30% offshore asset allocation and can now be included in the “Equities” allocation."
 
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Reg 28 can now go 100% offshore

The South African Reserve Bank (SARB) released Exchange Control Circular Number 15/2020 on 29 October 2020, which stipulates that all foreign-classified debt and derivative instruments, as well as exchange traded funds (ETFs), referencing foreign assets that are inward listed on a South African...
mybroadband.co.za mybroadband.co.za
 
WOW ... picture your RA -> 55% to S&P500 !!!!! Whoop Whoop!

I wonder what all the Unit Trust firms now think ? (Mega exit towards EFT's)
 
zerocool2009 said:
Well, the pro's vs con's here .... TAXES are like DEATH (its coming).

Its more related to 100% abroad and Taxes vs 75% (capped and all the REG28 rules) and then taxes
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I am still bias to not using an RA and moving all my cash out of the country. Tax will be on capital gains only if you choose to not have an RA.
 
Scooby_Doo said:
I am still bias to not using an RA and moving all my cash out of the country. Tax will be on capital gains only if you choose to not have an RA.
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How I see it ... RA's with the REG28 SUCKS !!! Full stop.

Now that you can invest 100% abroad (in rands, but 100% oversea exposure), the 27.5% just got more attractive for me ! So far its only Sygnia coming to the party, with the Sygnia ITRIX range

Guess what, I am transferring all my RA's and Preservation funds to Sygnia NOW !

I wonder why only EFT's and not Unit Trusts.
 
I see this move as in ..... "who recall when fire was made" ... thats how BIG i see this !
 
Have to wait and see what happens. I found it ironic that Magda kinda said good active management wins in SA market.. duh.

On the global stage.. not so much but things are kinda interesting right now.. USD market has all the warnings of an impending crash, highest stock market ever.. even Trump came out all giddy. Mean time they pumping money into the market, into people’s hands etc. yea they doing great

Tip: when morons celebrate their genius things go wrong when it comes to financial systems and investment.
 
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