Kim Rassou

The global economic outlook remains uncertain. While activity has been resilient, weakening US employment threatens consumer spending. Elevated tariffs persist, but extreme scenarios have been avoided, cushioned by lower interest rates, a softer oil price and loose fiscal policy. 

Global equities have performed well despite trading at elevated valuations due to the heavy US weighting, pointing to below-average long-term returns. Outside the US, valuations are more reasonable. Bond yields may decline with softer growth but long-term fiscal concerns will limit downside. Cash yields are expected to fall further, especially in the US.

Although South Africa’s outlook is weaker than earlier in the year, it is stronger than during the past decade, supported by reforms in electricity, logistics and the visa systems. Local asset valuations remain attractive, with potential for above-average returns over five to 10 years. The rand is modestly undervalued and may appreciate further. Key risks include global policy uncertainty, inflation volatility and fiscal instability.

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