MEETING PURPOSE
Our investment team aim to meet every week to discuss the macro environment and how this could impact our current and future portfolio construction.
KEY TAKEAWAYS
- Emerging markets and global value stocks currently outperforming growth style year to date
- US tech stocks are rebounding strongly, keeping America’s tech sector ahead — but global investors are starting to favour other sectors and regions, signalling a shift in overall market leadership.
- Gold remains attractive as a portfolio diversifier and hedge against currency risks
- South Africa-US meeting outcome is critical; the investment team agreed to wait for concrete results before adjusting SA exposure
TOPICS
Market Trends and Asset Allocation
- Equities broadly positive, with non-US equity, EM and EM value outperforming
- US equities strong but lagging EM; S&P 500 and NASDAQ near double tops
- Yield curve steepening, potentially negative for bonds and commodities
- Gold holding up well despite higher yields; seen as hedge against currency risks
- SA assets looking more attractive but the team is cautious ahead of key political events
US Exceptionalism and Global Shifts
- Alpine Macro view: US exceptionalism likely to persist, especially in tech sector
- Retail investors driving much of US equity gains through platforms like Robinhood
- Global savings glut and fewer listed US companies supporting equity valuations
- Some reallocations from US to EM/value, but US growth/tech still seen as exceptional
- Potential policy shifts (tax cuts, deregulation) could further boost US equities
Global Outlook
- Alpine Macro report: Fundamental case for gold remains strong
- Central Bank buying a key driver, doubling to ~1000 tons annually over the last 3 years
- Inverse correlation to stocks intensifies during sell-offs
- Gold miners attractive due to higher bullion prices and lower operational costs/oil price
- We maintain a 5-10% allocation – depending on fund mandate – to gold/gold equities as portfolio hedge
South Africa Political and Economic Outlook
- Critical meeting between President Ramaphosa and Trump upcoming
- Budget expected to show some cost-cutting measures but no major surprises
- Frans Cronje view: 70-80% of South Africans want peace and economic stability
- ANC and DA have mutual interest in stimulating growth to maintain middle class support
- SA potentially offering Starlink deal to potentially defuse criticism ahead of Trump meeting on Wednesday
Portfolio Positioning
- Generally positioned for risk-on environment globally
- Underweight SA bonds and property relative to neutral allocations
- Not well-positioned for potential strong Rand rally or SA mid-cap outperformance
- Team agreed to wait for concrete positive outcomes before increasing SA exposure
- Preparing cash to potentially add to SA bonds/property if meeting goes well
Next Steps
- Monitor SA-US meeting outcome closely and be prepared to act if concrete positive steps emerge
- Ensure sufficient cash is available in relevant portfolios to potentially increase SA exposure
- Continue to evaluate US exceptionalism thesis, particularly in tech sector
- Maintain gold allocation as hedge while monitoring for any shift in fundamental drivers
- Reassess overall SA positioning once budget details and meeting outcomes are known
The content of this article is for information purposes only and does not constitute an offer or invitation to any person. The opinions expressed are subject to change and are not to be interpreted as investment advice. You should consult an adviser who will be able to provide appropriate advice that is based on your specific needs and circumstances. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable and given in good faith, but no representation is made as to their accuracy, completeness or correctness.3