The third quarter of 2025 presented a complex and volatile landscape for South African markets. While the domestic economy showed signs of resilience, particularly in headline GDP growth, performance on the JSE was overwhelmingly driven by a commodity super-cycle led by precious metals. This strong sector performance was, however, set against concerning geopolitical trade developments that cast a shadow over future export-driven growth.
The quarter saw strong returns from precious metals, and bonds, with the rand strengthening. However, gains in the equity market were highly concentrated.
Equities (JSE): Resource-led outperformance masked broader market softness. The rally was driven almost entirely by precious metals. The gold price soared past the $3,800/ounce threshold, while Platinum Group Metals (PGMs) also posted strong gains. Resource stocks outperformed significantly, while Financials and Industrials were largely flat or negative.
Bonds: Delivered strong returns for the quarter. Domestic bonds performed well, reflecting a supportive environment for fixed-income assets.
Rand (ZAR): The rand strengthened against the US dollar, appreciating to around R17.27. This likely reflected support from the commodity boom and the associated capital inflows.
Listed property: Lagged the broader market, delivering generally poor performance during the quarter.
Global Economic Backdrop
Global growth projections for 2025 range between 3.0% and 3.3%, with advanced economies exhibiting tentative resilience. However, this recovery remains marked by persistent uncertainty and regional divergence. For South Africa, rising global uncertainty and escalating trade tensions present significant headwinds. Commodity demand, driven by geopolitical instability and central bank purchases, was a key factor behind our market's performance.
US Tariffs and AGOA Status
The most impactful geopolitical event of the quarter was the significant deterioration in trade relations with the United States.
US Tariffs: The US imposed a 30% unilateral tariff on South African exports, which came into effect on 7 August 2025.
AGOA Implications: The imposition of this tariff is widely viewed as a signal of the practical end of South Africa's preferential trade access under the African Growth and Opportunity Act (AGOA), which was scheduled to lapse at the end of September 2025.
SA’s Response: The government has been actively engaging the US to secure a deal and has accelerated efforts to diversify exports to alternative markets. This new trade reality demands urgent business model reinvention for many of our export-oriented companies to mitigate the expected economic impact, particularly in the automotive, agriculture, and textile sectors.
South Africa
South Africa continues to navigate complex local political and geopolitical tensions, with an unstable GNU, looming local government elections in 2026, and the United States’ imposition of tariffs on South African goods. The government remains optimistic about U.S. trade relations amid African Growth and Opportunity Act (AGOA) uncertainty, which officially expired on 30 September, marking the end of 25 years of preferential trade access for several African countries.
AGOA, signed into law by then U.S. President Bill Clinton in 2000, provided sub-Saharan Africa with duty-free export access, driving industries from Lesotho’s textiles to South Africa’s wine and citrus sectors.
Official GDP figures for Q2 2025 (April–June) indicated an acceleration in economic activity, with the economy growing by 0.8% quarter-on-quarter – a marked improvement from the 0.1% growth recorded in Q1 2025. This recovery was broad-based, with notable contributions from the manufacturing industry (particularly petroleum, chemicals, and motor vehicles) as well as the trade, catering, and accommodation sectors.
The labour market remains South Africa's most significant structural challenge. The unemployment rate for Q2 2025 rose to 33.2% from 32.9% in Q1, while the expanded unemployment rate declined slightly to 42.9%. Although the trade and construction sectors recorded some job gains, the overall increase in the number of unemployed persons continued to outpace employment growth – underscoring the persistent job creation crisis.
Outlook
Q3 2025 was a quarter of two halves: strong market returns driven by high global commodity prices but fundamentally undermined by severe global trade challenges. Our focus remains on navigating these external shocks while capitalising on the attractive valuations of domestic stocks, supported by the economic recovery observed in Q2 2025.
We are encouraged to see companies diversifying their revenue streams and improve operational efficiencies to counter rising domestic costs and the new tariff regime. The path ahead will require discipline, strategic foresight, and close cooperation with policymakers to ensure South Africa remains an attractive long-term investment destination.
