A Quarter of Contrasting Fortunes
From resilient global equities to mounting domestic pressures, Q3 delivered a mixed picture for investors.
The third quarter of 2026 presented a complex trading environment characterised by persistent inflationary headwinds, geopolitical friction in key commodity-producing regions, and shifting global central bank policy. Global equity markets exhibited underlying earnings resilience, supported by strong corporate earnings in the technology and energy sectors, while rising bond yields weighed on global and domestic fixed-income markets.
In South Africa, higher global energy costs and stubborn inflation added to an already challenging growth environment, prompting a firm policy stance from the South African Reserve Bank (SARB). Despite these pressures, select equity sub-sectors, quality income instruments and real assets delivered strong returns.
Key Market Developments
Global Equity & Commodity Markets
Energy price spikes dominated headlines throughout Q3 2026. Geopolitical tensions and supply-chain vulnerabilities pushed Brent crude oil prices higher during the quarter, averaging between $85 and over $105 per barrel. Industrial metals, particularly copper, continued to benefit from strong demand driven by global infrastructure development and multi-year investments in AI infrastructure.
Despite rising input costs, developed-market equities recorded modest gains, with corporate profitability holding up better than broad macroeconomic sentiment suggested. This was supported by disciplined capital management and secular spending trends in technology, energy, and healthcare.
Fixed Income & Monetary Policy Shift
Global bond markets faced headwinds as major central banks paused or hiked interest rates to counter renewed commodity-driven inflation. The US Federal Reserve raised its key policy rate by 25 basis points to 3.75%–4.00% in September, while the European Central Bank (ECB) increased rates to 2.50%. Long-term Treasury yields also moved higher, putting downward pressure on global aggregate bond indices.
In South Africa, annual CPI inflation fell from 5.0% in June to 4.3% in July, before edging up to 4.4% in August. With elevated fuel and logistics costs posing further inflation risks, the SARB’s Monetary Policy Committee (MPC) raised the repo rate by 25 basis points to 7.25% in September, taking the prime lending rate to 10.75%.
South African Economic and Market Dynamics
The South African rand demonstrated relative resilience against major currencies, trading at around R16.54 to the US dollar in early October.
The economy contracted 0.2% in Q2, ending six consecutive quarters of growth. Weak performance in mining, manufacturing, and trade prompted the SARB to trim its full-year GDP growth forecast from 1.4% to 1.2%.
Equity returns across the Johannesburg Stock Exchange showed high sector dispersion. Resource-linked counters benefited from commodity tailwinds, while domestic interest-rate-sensitive sectors, including property and certain retailers, faced pressure from higher borrowing costs and weak consumer demand.
Mergers and acquisitions activity was also prominent, including Sanlam Group’s buyout of Santam, Alexander Forbes Group’s repurchase of Prudential Financial’s shares, and Gold Fields’ pursuit of Northern Star, Australia’s largest gold miner. Northam Platinum also attracted takeover interest following an unsolicited approach from an unnamed rival producer.
Outlook for Q4 2026
Political focus shifts to Washington as the US midterm elections approach. The outcome could change the balance of power in Congress and introduce uncertainty around fiscal policy and legislation, with implications for global markets.
In South Africa, investors will be watching the Medium-Term Budget Policy Statement (MTBPS), scheduled for 21 October 2026, for signs of fiscal discipline, debt stabilisation and structural reform updates.
The upcoming local government elections (4 November 2026) could reshape control of key metropolitan areas, test coalition stability and influence investor sentiment toward local governance. Improving the capacity of metros and major city administrations will be key to business confidence and corporate investment.
Celebrating 20 Years of Mazi
Founded on 1 October 2006 with a vision to showcase investment excellence and deliver superior risk-adjusted returns for our clients, Mazi Asset Management was built on the core principle of "Delivering through Diversity". Over the past two decades, we have evolved from an entrepreneurial black-owned asset manager into an institutional investment firm managing multi-asset, global, Africa and domestic equity, fixed income, hedge fund, property and Shariah-compliant mandates.
Sustained Investment Discipline: Through multiple global market cycles, from the 2008 Global Financial Crisis to post-pandemic economic shifts, our investment framework has remained steadfast. We focus on identifying sustainable, defensive business models with credible management, strong balance sheets and attractive valuations.
Business Ownership: We remain 100% staff-owned, aligning the interests of our portfolio managers and investment team with those of our clients.
People & Capability Building: Our success over the last 20 years is rooted in our people, whose deep analytical rigour and diverse perspectives continue to drive innovation, performance, and risk management across our strategies.
As we mark two decades of partnership with our clients, we extend our sincere gratitude to the trustees, investment committees and partners who have entrusted us with managing their capital. We enter our third decade with the same passion, humility and commitment to investment performance.
Looking Ahead
Navigating volatile market cycles requires an unwavering focus on long-term investment principles rather than short-term sentiment. As we celebrate 20 years of investment excellence, our commitment to delivering superior risk-adjusted returns and safeguarding our clients’ capital remains as strong as ever.
We thank you for your continued trust and partnership.
