The ongoing Middle East war has erased nearly R350 billion from the assets under management of South Africa’s Public Investment Corporation (PIC), CEO Patrick Dlamini has told Parliament.
According to Dlamini, the economic fallout stems largely from rising fuel prices linked to the closure of the Strait of Hormuz, which has placed additional strain on global markets and investment portfolios. The PIC had been approaching the threshold of R4 trillion in assets under management before the conflict began, the CEO noted.
Grant Nader, portfolio manager at Benguela Global Fund Managers, explained that the losses are not unique to the PIC, as the entity invests pension fund money in stock and bond markets both in South Africa and overseas.
“With the advent of this crisis as it unfolded globally, markets sold off on the back of that,” Nader said. South Africa experienced a “sharp correction of at least 15%” following a very strong year, while global markets saw declines of up to 10%, he added.
Nader emphasized that the PIC did not deliberately lose the money and expects to recover it. “It is very much a normal part and parcel of investing in the stock markets and even in the bond markets,” he said.
Describing the PIC as “a big ship,” Nader noted that even if the entity had not been blindsided by the war, avoiding the losses would have been difficult. He advised pension fund investors to remain invested for the longer term, pointing out that despite four significant sell-offs since the start of 2020, most markets have done at least 100% over the six-year period.
While global markets—particularly the US, South Korea, and Japan—have already recovered to all-time highs driven by the AI infrastructure boom, Nader said South Africa’s recovery is lagging. He noted that rising energy prices will prolong the recovery locally, as South Africa is a net energy importer, unlike the US and oil-exporting countries such as Nigeria.
“Be a little patient. We’re not in this for the short term,” Nader said, adding that he expects South Africa to recoup to pre-war levels by the end of the year at the latest, assuming the Middle East conflict is resolved.