2026 Outlook

As we look ahead to 2026, South Africa stands at a pivotal point in its economic journey. The investment landscape is shaped by a myriad of factors, including global economic trends, domestic policies, and socio-political dynamics. This blog aims to provide insights into what investors can expect in the coming years, highlighting potential opportunities and challenges within the South African market.

Local Equities:  Our market remains relatively inexpensive compared to global peers, even after recent gains. Much of the value was realized due to positive developments like the GNU and Eskom, but the rally in emerging markets was largely driven by US policies and their impact on the USD. The bulk of the returns in SA Equities was in the mining sector, whilst other sectors continue to offer value. We anticipate continued volatility as uncertainty persists around Trump’s tariff policies.

Local Property:  This sector’s volatility is hard to predict, as it’s influenced by both interest rate changes and equity market movements. It’s also a small part of the JSE, so we don’t view it as a standalone asset class. We would only consider an overweight position if valuations became extremely attractive, but after an extremely good year this is not the case at the moment.

Local Bonds + FI:  With a medium-term outlook, investors can secure CPI plus 5% over the next five years by accepting some duration risk. It’s important to recognize that this isn’t a money market investment and does involve some volatility - about half that of equities - but returns are predictable over the set period. However, the diversification benefits for growth assets are diminishing, so we don’t see a strong case for an overweight position.

Local MM:  Holding cash over long periods comes with an opportunity cost. Since investments should be evaluated in real terms, keeping cash for extended durations is rarely effective unless enhanced by term, duration, or credit - at which point it would fall under Bonds and Fixed Income.

DM Equity:  While there are some attractive opportunities, the market is largely driven by expensive US megacaps, resulting in high overall valuations. However, offshore equities currently provide better diversification than bonds, so we maintain a Neutral stance rather than underweight. Success in this area depends on careful stock selection, favoring regions like Europe and underweighting large US tech companies."

EM Equity:  After years of underperformance, Emerging Market equities offer better value currently than Developed markets. Emerging market indices are dominated by the likes of China though, so be careful about the composition of Emerging market basket, as a risk mitigation strategy.

Global FI:  Global interest rates are not in any form of high and have just normalised to longer term levels. The world is currently in a rate cutting cycle, but US tariffs are bound to be inflationary in the long term, and from this perspective not worth it, especially for a SA client where the bulk of the volatility will come from the exchange rate.

Supplied by Multivest Asset Management