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
- US equity market exceptionalism remains evident, with strong equity performance supported by fiscal stimulus, resilient consumer demand, and superior corporate profit growth. The US continues to benefit from deep capital markets, leading innovation, and a dynamic entrepreneurial base
- Commodities and energy markets face supply constraints and geopolitical shifts, creating potential opportunities
- South African political landscape remains uncertain, with potential changes to ruling party dynamics on the medium term horizon (2026)
TOPICS
Global Market Year To Date Overview
- US growth has outperformed value year-to-date, with MSCI World up 10.78% vs 11.67% for value
- Emerging markets have rallied: China up 23%, EM overall up 19%, Brazil up 11% , JSE Top 40 up 22%, JSE ALSI up 19% (ZAR terms)
- European equities up 24%, S&P 500 up 9.41% – all in USD terms
- Bitcoin up 25% year-to-date
US and EU Visit Observations by Gavin Betty and Armin Diem
- Significant divergence observed between elite/wealthy segments and broader population in US cities visited
- Turkey’s economy appears more robust than expected, with strong infrastructure and tourism
- Generally positive economic conditions observed across visited European countries
- High-quality vehicles and infrastructure prevalent, even in countries perceived to be in recession
Commodity Markets
- Oil market facing refinery bottlenecks and shifting trade flows
- US becoming major energy exporter to Europe, replacing Russian supply
- Industrial metals seeing volatility due to potential tariffs, especially in copper
- Precious metals showing strength, with gold consolidating recent gains
South African Outlook
- Political uncertainty around potential changes to ruling party dynamics
- Debate over impact of public-private partnerships vs political leadership
- Local SA Inc equities have underperformed, with resource stocks, Naspers/Prosus and some Industrials outperforming
- SA Property and bond markets showing some positive signs
Asset Allocation Considerations
- Dollar strength/momentum remains a key factor for positioning
- Maintaining diversification with higher allocation to growth assets
- Caution required – a short term barbell strategy combining commodities and NASDAQ remains a short term trading position
- Potential for market pullback, but significant institutional and consumer cash on sidelines – may mean a buy in the dip strategy is to be followed
Next Steps
- Monitor Dollar strength as a key driver for commodity and emerging market performance
- Reassess positioning in South African equities, considering potential positive mean reversion in underperforming sectors like Financials and Retailers
- Evaluate opportunities in energy sector, particularly refineries facing supply constraints
- Maintain some cash reserves to capitalise on potential market pullbacks
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