Chris Holdsworth

Inflation is proving to be more sticky than central banks would like in a number of developed markets. In addition, the recent rally in the oil price and the prospect of widespread increases in tariffs raises the chances of inflation remaining at uncomfortable levels for the foreseeable future. As a result, central banks are likely to be slow to cut rates even as nascent signs of a global slowdown become evident. While the outlook for the year ahead is cloudy, the US market offers little to no margin of safety in our view. In contrast, we see value in SA risk assets with several tailwinds: inflation expectations no longer being an obstacle to cutting rates, consumer incomes having been boosted by tapping two-pot savings and our expectation that the budget in February will beat rating agency expectations.