Sinayo Securities (Pty) Ltd (Sinayo) is a South African, independent, majority-black female-owned stockbroker and member of the JSE Limited. Providing top-quality 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…
Tell us more about the company’s journey and the milestones achieved.
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. It is not easy to acquire institutional clients. So, for us to serve this challenging market is momentous.
It is in this vein that we 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 female-owned business impact the team dynamic?
Being a female-led business in a male-dominated environment is quite arduous. 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.
Other potential clients would make it clear to us that they had doubts and would say, “Let’s give it a year and see if you survive before we do business with you.” 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. These challenges united and strengthened our 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.
What sets Sinayo apart from other securities businesses?
We provide exceptional client service through the best execution and by being insightful and responsive. We have built deep relationships with our clients based on respect for the value we add to their businesses.
Our key focus is to deliver creative solutions while instilling confidence and inspiring our clients. We partner with our clients in delivering our services. We are connected and nimble, we respond quickly to client needs. Value add is our ethos. And our diversity differentiates us from other securities brokers.
Tell us a bit about the operations at Sinayo.
We provide top-quality securities trading services to pension funds and asset managers in South Africa, specializing 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 isto develop innovative solutions that provide access to investment for all. Our mission is toprovide 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 organization.
- 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, which combines best practice with outstanding innovations. With the right partnerships, we believe that we can change the financial landscape by offering a unique range of tools to our clients.
At Sinayo we are constantly striving to improve our service offering and searching for better and more effective systems to benefit our trade performance. Our experienced trading desk is built on hard work, trust, honesty, and excellence.
We firmly believe in the best execution for 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.
In corporation with S-Software Design, we have been providing transaction cost analysis (TCA) for equities on the JSE to top institutions in the South African financial markets.
Considering the reality facing not only South Africa but the world, 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 is Project Funda and how does it unlock opportunities for young, black graduates?
Project Funda is a two-year graduate programme comprised of extensive training and experience. Our vision is to recognise and develop talent, particularly around research and leadership in the financial services industry. We strive to create positive experiences that will lead to improved engagement and produce adept professionals who will deliver for their companies and clients.
Graduates are also required to attend short-term courses that elaborate on practical aspects of finance, trading, and stockbroking. Graduates return to their respective roles where they are either employed full-time, work as interns or continue with the completion of their studies. To date, we have had more than 80 graduates join the programme and most of them have been placed in attractive financial services businesses.
What are the future growth plans for Sinayo?
Our future plans include growing 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.
What motivated you to enter the finance sector?
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.
From a personal perspective, did you always envision being an entrepreneur?
Yes, from quite a young age. My grandmother identified the entrepreneur in me from an early age and I attended a commercial school. Since then, I knew that I’d run my own business. It was destined to be that way.
Who do you consider your mentors, and what lessons have you learned from them?
There are so many people who have contributed to my life. My grandmother has played a huge role in grooming me to be the woman I am today. She taught me independent thinking and self-reliance. I have had the opportunity of being mentored by men and women from all walks of life who gave their time to me selflessly. They taught me humility and resilience.
They gave me tools to assimilate between what matters and what doesn’t matter because once you are bolted down by things that don’t matter, you don’t go far. Some of them have given me an opportunity to stand on their shoulders and see far. Mentorship is crucial and that’s why I myself, I am a mentor to many.
Since starting your journey what have been the highlights of your career?
Failure is inevitable, how you navigate and respond to your challenges is what matters. And therein, perhaps, lies one of life’s lessons. Life has seasons, it has good and bad moments, evil and pain.
What sets you apart is your ability to navigate and remain balanced and comfortable with all seasons and stay calm during both good and bad times. Remember the beauty of summer is its heat and the beauty of winter is its chilly cold weather. There is no growth in a ‘soft life’. It is how you respond to life challenges that matter.
The beauty of entrepreneurship lies in your ability to do what you are passionate about. It’s important to be upright and be true to your conviction and purpose. It is the unwavering commitment to this purpose that’s crucial for your success.
Playing your part and having an impact on society is fulfilling. Success is painful, there are pains you have to bear to be successful. 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. Being consistent is key.
What is the key to becoming an entrepreneur?
Entrepreneurship is not easy; it requires sound perception and insight. 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. Be like a lion, be courageous and confident. Your ability to hunt on your own and cooperate with others when necessary is crucial.
Knowing when to cooperate with others so that you can go far is an important balance. Humility is important, it helps you build lasting relationships.
What have been your major challenges navigating the business landscape as a black woman, and how have you overcome this?
Leadership is a skill and art which requires nurturing. Leading human beings is not for the faint-hearted; it is a tough ask.
People are complex, sophisticated, and delicate. And the business environment requires mastery of stakeholder relationships. It’s not an easy task as a black woman when you still have to break in and earn recognition.
To shift the mindset and the age-old corporate culture which keeps us out of top-ranking positions and business, in general, requires resilience. There are unspoken conditions to being a woman in a man’s world. I have faced a number of headwinds in my journey. I am a big promoter of inclusivity and fairness. I had to be fearless and courageous. I worked with progressive men who think differently.
Funding has been another big challenge, but through cooperation, we have managed to overcome it. Building strong relationships with funders has helped us a lot. 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.
In an ever-changing landscape, as a leader, how do you stay ahead to impact meaningful change?
Not being afraid of change and embracing change is key. 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 and their businesses flounder.
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.
