Navigating a Shifting Macro Landscape
Against a changing global backdrop, AI remains the defining secular force, while gold and precious metals are positioned to stay stronger for longer into 2026.
At the start of 2025, markets were braced for a hard landing, persistently high inflation and higher interest rates. Instead, the year closed with a resurgence in real assets and commodities like gold and PGMs, easing inflation, lower interest rates, and a level of economic resilience across much of the global economy.
The defining feature of 2025 was a renewed turn towards nationalism and de-globalisation. Trade protectionism shifted from political rhetoric to fiscal reality, particularly in the United States. The early implementation of broad-based tariffs acted as a structural shock, contributing to persistently higher US inflation relative to its G7 peers.
From a growth perspective, both the US and China experienced a moderate slowdown. In the US, newly implemented trade barriers weighed heavily on economic activity. Meanwhile, in China, the slowdown was compounded by the ongoing property sector downturn and subdued consumer confidence.
Domestically, South Africa experienced a notable period of stability. With more than 20 months of uninterrupted power supply, with a steady GDP growth of 0.5% in Q3 of 2025. While modest, continued structural reforms in energy and logistics have helped establish a much-needed floor for local valuations.
Despite tariff-induced pressures, the US Federal Reserve remained the global laggard in easing interest rates, ending the year with a target range of 3.50% to 3.75%. In contrast, both the European Central Bank and the Bank of England moved more aggressively to counter slowing growth. This divergence created significant tactical opportunities across global fixed-income markets.
South Africa capitalised on a "sweet spot" in mid-2025 when local inflation dipped to 2.8%. The South African Reserve Bank responded decisively, reducing the repo rate to 6.75% from 7.25%, which helped catalyse a relief rally in local credit markets.
Fiscal developments were more constructive than in recent years. Stronger revenue collection, improved sentiment following South Africa’s removal from the FATF grey list, a sovereign credit rating upgrade, and a firmer currency all supported the outlook. Continued progress on structural reforms, particularly in energy and logistics, reinforced cautious optimism.
In calendar year 2025, South African financial markets delivered solid total returns across all major asset classes. Equities led performance with gains of 42.4%, overtaking property, which returned 30.6%. Bonds delivered returns of 24.2%, followed by cash at 7.5%. Equity performance was largely driven by precious metals stocks, which returned 214.6%.
The year will be remembered for the exceptional performance of precious metals. Gold recorded an all-time high of over $4,600 per ounce, while silver outperformed nearly every other major asset class. This strength was driven not only by inflation concerns but also by a tangible acceleration in de-dollarisation, as sovereign buyers continued to diversify reserves away from the US dollar. We expect the structural support for hard assets to persist into 2026.
Investment Outlook for 2026
As we enter the new year, our strategy remains anchored around three core pillars:
Selective AI Exposure
We remain constructive on AI, with the focus shifting from early-stage enthusiasm to tangible return generation. Our emphasis is on companies demonstrating clear returns on the roughly $400 billion of infrastructure investment deployed last year.
Real Asset Allocation
In an environment shaped by persistent trade frictions, we maintain a constructive allocation to gold and industrial commodities, where supply constraints and strategic demand continue to provide support.
Emerging Market Opportunism
With South Africa’s reconstruction narrative gaining momentum and a softer US dollar backdrop, we see attractive upside in high-quality local equities trading at meaningful discounts in relation to global peers.
Consolidation within the metals and mining sector is expected to continue as companies compete for access to critical minerals.
The volatility of 2025 reinforced that active management and global diversification are not optional, but essential. We thank our clients for their continued trust and confidence in our stewardship of their capital.
