Blasting away at brokers
It is a great relief that Mark Barnes has enough time left over after delivering post to retain his chairmanship of the Purple Group, and to pen another of the ebullient chairman’s letters that are his trademark.
Never one to use a sniper rifle when a full 100-cannon broadside can do the job, he takes on the entire asset management and stockbroking industries with his vision of a brave new world of wealth creation that is open to everybody, rich or poor, clued-up or clueless.
To massed applause from anybody who’s ever been bored witless by an amateur stockpicker, let alone a professional, he points out that you don’t need to understand an alphabet soup of acronyms to buy a share, and that the days of the industry being stitched up by an insider elite have well and truly been blown away.
Purple is following the trend that is dominating business today: that anywhere there’s a business model that’s been chuntering along happily for a while, there will be a bunch of punters trying to disrupt it so comprehensively that its own mother wouldn’t recognise it.
This is precisely what Capitec did to the retail banks. Purple is betting on its EasyEquities platform to provide a similar lunch-eating experience to the old-world asset managers and stockbrokers. Client account numbers have risen from 8,000 to 30,000 in a year, and the plan is to grab clients with this easy, low-cost offering and then sell them other products where appropriate. All this investment has hammered the income statement, but it’s a significant bet on the future.
Still waiting for the barbarians
At a time when SA appears to be able to produce more political controversy in a week than most countries would deem appropriate in a decade, it’s not a bad plan to remove the eyeball from the navel and cast a glimpse around the rest of the world.
We have Vladimir Putin chucking his weight around like a pantomime villain, complete chaos in Syria and the surrounding region, the fallout from an American election conducted largely in the gutter, and the impact of Brexit on a faltering Europe, to name but a few flashpoints.
Under the circumstances, it is not entirely surprising that Richemont characterises the situation as a difficult global environment. There is a growing awareness that extremes of inequality have hollowed out the lot of the suffering middle classes. And as the barricades start to go up in the streets, the last thing a high-net-worth individual needs to do is to get spotted by the mob with a watch on his wrist that’s worth multiples of the average annual wage.
Richemont’s sales are down significantly around the world with the exception of mainland China, Korea and the UK, which retains its position as destination of choice for the unreconstructed Russian oligarch with money to burn and "nieces" to keep sweet.
The company has been buying back slow-moving inventory in order to help out its retail partners, and while its profits are half what they were last year, it still made a cheeky €540m in the six months, so it’s fair to say that the barbarians are not at the gates just yet.