Delivering creative solutions and instilling confidence

Sinayo Securities (Pty) Ltd (Sinayo) is a South African, independent, majority-black female-owned stockbroker and member of the JSE Limited. Providing topquality securities services to institutional investors in South Africa and specializing in JSE-listed equity sales and trading, the company is an agency-only securities business. CEO, Babalwa Ngonyama, tells us more...

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Tell us about the company’s journey. To get it here has been quite a ride, one that I believe has been accomplished due to the quality of the service and seamless solutions we offer to our clients.

We resolved quite early on that, to establish a sustainable franchise one had to assemble an experienced team of data scientists, economists, stockbrokers, and strategists. I am proud to claim that our team has been actively engaged in the JSE and financial markets for the last three decades. This depth of skill and understanding ensures that we comply with regulations and handle trade, risk, and settlement activities as a matter of course.

We now serve some of the top asset managers in the country, and this is a huge milestone for us.

We also diversified our activities by investing in complimentary businesses that include Constellation (a derivatives business), Optimize (a securities lending business), and Camissa Asset Management.

How does being a majority black femaleowned business impact the business? There are certain ways in which men approach business, and we bring a different perspective to the financial services industry which enhances the traditional way of how business is done.

Making clients believe in us has been a challenging task. We’ve had to deliver multiple presentations, engaging potential clients and convincing them of our capabilities, which was twice as much effort as what a typical male-led business would have had to do.

These challenges have, made us stronger, built resilience, and provided us with the platform to be focused on execution excellence.

We had to be very clear about our purpose and “why we are here”. We focused more on developing the team and its dynamics and tapped into each other’s strengths as a team. Cooperation is one of the values we treasure at Sinayo. We ensure that each member plays an important role in a team. We value inclusivity. Our diverse nature comes in handy in solving clients’ problems.

Tell us a bit about Sinayo's operations. We provide top-quality securities trading services to pension funds and asset managers in South Africa, specialising in JSE-listed equity sales and trading.

In addition, we hold strategic equity interests in Optimize and Sinayo Wealth. Optimize provides us with scrip lending capabilities and through Sinayo Wealth we offer qualitative Environmental Social and Governance (ESG), quantitative research, including trading idea research. Our partnership with Software Design provides transactional cost analysis for the Sinayo Securities team.

Our vision is to develop innovative solutions that provide access to investment for all. Our mission is to provide our clients and portfolio companies with extraordinary insights, which generate tangible impact and enduring wealth when implemented. To deliver on our objectives, we:

• Provide exceptional client service through the best execution and by being insightful responsive and connected.

• Add value to our clients by providing quality Environmental Social and Governance “ESG”), quantitative, and thematic research including trading idea research.

• Provide executive access to our clients through theme-driven events.

• Reflect transformation through the diversity and values of the organisation.

• Foster transformation by training and mentoring talented black students/graduates.

• Leverage the brokerage platform to form meaningful relationships and drive sustainable growth.

We pride ourselves in our unique thinking process, and believe that with the right partnerships we can enable change in the financial landscape by offering a unique range of tools to our clients.

Our Sub-Saharan Africa reach offers execution in 11 African countries, Botswana, BRVM, Ghana, Kenya, Mauritius, Namibia, Nigeria, Rwanda, Tanzania, Uganda, and Zimbabwe.

Our vast knowledge, coupled with the latest technology, allows us to timeously execute and efficiently price transitions. We offer competitive brokerage rates depending on the size and frequency of trades. We offer electronic routing for Care Orders, Direct Market Access (DMA), and Algorithmic trading on the Iress Pro and Instinet systems.

Considering the realities, how has this impacted the appetite for investment?

The appetite for investing in South Africa is low at the present moment, given the recent greylisting, the economic headwinds, the electricity supply disruption and infrastructure challenges, and competition from other emerging markets.

We cannot give up. We believe at Sinayo that each country has its own challenges and businesses and citizens have a role to play in solving some of the country’s challenges.

Sinayo Securities positions itself as a local partner that understands the local dynamics that affect investment returns. We assist investors to understand and appreciate the risks and opportunities the country is facing, leading them to make better financial decisions. We have a network of experts that assist our clients with analysis of the South African environment. We assist our clients identify and seize opportunities in this changing world.

How do you see the next few years unfolding for investors?

With regards to opportunities, we are very close to the crest of the interest rate cycle, expecting the first decline in early 2024. South African equities and bonds are cheaply priced in the international context. The South African 10-year bond is currently yielding 10.7%. This is quite attractive if one considers that the Reserve Bank is targeting medium-term inflation of around 5%.

The high inflation level of 7% driven by higher fuel costs and currency depreciation is, on the back of successive interest rate hikes by the Reserve Bank, expected to slow down over the next 18 months and we believe the inflation target range will be reached in the coming year.

Declining interest rates will yield equity gains. The average Forward Price/Earnings multiple on the equity market over the past 10 years is around 14.5x. We are currently at 10.6x. We believe that both equities and bonds will be able to generate returns in excess of 15% for at least the next two years. As interest rates abate, growth will be stimulated and opportunities in other areas such as private equity, infrastructure development, and ESG will also gather momentum.

Although ESG principles have been around for many years internationally, South Africa is somewhat behind the curve, but catching up fast. New legislation by the JSE to regulate the way corporates report on their ESG initiatives will greatly improve the visibility and availability of data to improve the assessment of progress.

Sinayo’s research division embarked on a process of ranking listed companies on their ESG credentials. The process uses both third-party scores and primary ESG data points. The listed companies which focused on improving their ESG credentials have materially outperformed.

With regards to the challenges, South Africa confronts numerous challenges that to some extent explain why our financial markets are cheaply priced. These challenges include the energy crisis, political foreign policies, crime, unemployment, and the brain drain.

We need to make South Africa attractive for our young, qualified people to remain here and make an active contribution to the economy. Pro-growth economic policies will greatly address most of these challenges.

From a research perspective, the availability of data on especially ESG initiatives remains a challenge. We believe that with the implementation of the JSE’s reporting regulation on ESG, the ability to assess companies will improve greatly.

What are Sinayo's future growth plans?

We aim to grow our reach internationally, bringing in new products and services for our clients, and growing our focus on ESG.

We focus on covering the financial markets from a broader macro point of view, using quantitative and qualitative techniques to research and valuate assets both locally and internationally.

Due to the changes in regulation in early 2023, South African pension funds can now invest 45% of their assets offshore. This has increased demand for international research which we have now incorporated into our research product range.

Allocations to alternative investments and infrastructure projects have also increased to 15% and 45% respectively, opening the door to consider the launch of a private equity fund.

Another area of importance is ESG, which we believe is here to stay and will only grow in its importance. We currently offer a quantitative ESG ranking for South African listed companies, but we are in the process of developing a qualitative product on listed companies that can also be used to analyse private equity opportunities.

Motivation to enter finance

I entered finance to challenge the status quo that existed in the industry and bring a balance from a gender perspective. Secondly, finance is at the centre of our economy and economic development. To play a meaningful role in this space matters for our society and the financial sector enables me to do that. At Sinayo, we preserve people’s wealth. So, how we buy and sell shares is important to the livelihood of pensioners – the men and women in the street. Playing your part and having an impact on society is fulfilling.

Lessons learned

Failure is inevitable, but how you navigate and respond to your challenges is what matters.

Success is painful and a successful leader has a lot of scars. It’s through cooperation and working with your team that you stand a chance to succeed and go far.

Building strong relationships with funders goes a long way. People want to give money to someone they can trust. So, building trust and showing integrity comes a long way. You can have clients but without integrity, you can’t go far.

Notes on entrepreneurship and leadership

Being and entrpreneur and leader requires sound perception, insight, and believing in and knowing yourself. Be less concerned about what society thinks of you, know what you really are, and continue to challenge yourself and raise your game.

Don't be afraid of change. Once you embrace change, you improve your ability to see opportunities brought by the changing landscape. There are always opportunities in a changing environment. We invest in understanding the change and execute with speed so that we stay ahead. Many people who are afraid of change never adapt, hence they get left behind.

Lastly, a positive attitude is crucial for an entrepreneur. We live in hope and faith in our abilities and those of others. If hope disappears, forget about moving forward. More importantly, you must surround yourself with astute and positive people. 

Sinayo Securities (Pty) Ltd. (Sinayo) is the leading South African, independent, majority-black female-owned stockbroker and member of the Johannesburg Stock Exchange (JSE).

Sinayo’s vision and leadership are focused on the ambition to drive a legacy of sustainable transformation and inclusivity in the South African stock broking industry. Central to this vision is the continued growth of a sustainable and valued business offering our clients high-quality differentiated products, services and tailored solutions.

We built our business on the foundation of experience individuals with a strong entrepreneurial spirit, combined with the formation of longstanding and impactful client relationships.

Inclusion is not a matter of political correctness; it is the key to growth and competitive advantage. Diversity and inclusion, which are the real grounds for creativity and innovation, remain at the centre of what we do.

We have an experienced team of experts including data scientists, economists, stockbrokers, and strategists. We are proud that our team has been actively engaged in the JSE and financial markets for the last three decades. The depth of their skills and understanding ensures that we comply with regulations and handle trade, risk, and settlement activities as a matter of course.

Key to our strategy is the delivery of creative solutions that transform potential into favourable prospects, while instilling confidence and inspiring our clients.

With Project Funda, we recognise and develop talent in research and leadership in the financial services industry.

Through supporting 180 children at the Golden Ark Care Centre in Soweto, Sinayo ensures that all learners go to school with full stomachs, ready to learn and make the most of the day ahead.

Sinayo Securities (Pty) Ltd

+27 11 783 6599 l info@sinayo.co.za www.sinayo.co.za