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Fin24 reports that the Helen Suzman Foundation (HSF) says that the introduction of prescribed assets in respect of financial institutions would have a "very real negative impact" on them and on the economy as a whole.
The foundation released a briefing paper on Tuesday on potential impacts of prescribed assets. Prescribed assets’ refer to the practice of requiring funds to invest a certain percentage of their assets in government-approved instruments. The ANC, in its 2019 election manifesto, indicated that the party would "investigate the introduction of prescribed assets on financial institutions’ funds to unlock resources for investments in social and economic development". ‘In its paper, the HSF said that introducing prescribed assets would have a "negative impact on the stock-market and the country’s overall financial stability". Researcher Charles Collocott added: "Making investment funds instruments of government policy would be counter to the fiduciary duty of fund managers to act in the best interests of its members [….] as it will result in lower than market returns for the beneficiaries." He also claimed that prescribed assets would likely lead to decreased foreign investment in SA government bonds and SOE debt, reduce incentives to save for retirement, and an erosion of investment value. Financial institutions have been adamant in arguing against the introduction of prescribed assets, saying it would them force to bail out debt-laden government entities.
- Read the full original of the report in the above regard at Fin24
- Read the HSF’s brief on this subject at HSF News
Get other news reports at the SA Labour News home page