Vassili Panoussis

The end of 2024 brought about heightened levels of volatility across financial markets, largely caused by Trump’s win as well as the Federal Reserve’s hawkish tone at their December meeting. The former event caused a surge in prices and the latter caused a widespread ‘risk-off’ sentiment that saw much of the gains erased.

Our outlook for Q1 2025 is one of optimism for offshore equities, specifically for the US, given the robust US consumer that continues to spend undeterred by higher interest rates. Furthermore, given the Fed’s hawkish stance on account of inflationary fears linked to the election of Trump, we believe this will detract investment into emerging markets until a clear path of disinflation is accepted. 

Last year we saw the Reserve Bank mirror the Fed in terms of rate cuts, but given South Africa’s struggling economy and higher real rates, we believe it will begin cutting rates more aggressively than the Fed. Therefore, we believe local bonds will continue to be attractive.

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