SA Inc is set to end 2025 on a high, posting one of its strongest annual gains in years as sentiment shifts ahead of 2026 — a year likely to be clouded by political noise before local government elections.
Resource stocks led by gold and platinum group metals (PGMs) have led the charge, with the precious metals accounting for nearly a quarter of the FTSE/JSE capped Swix index.
Resource stocks are up a staggering 122% this year, followed by property (25%), financials (15.87%), and industrials (13%).
The surge of 31% in the all share index has seen the JSE add about R5-trillion in value, capping off a record-breaking year.
“South African equities have done exceptionally well. There has been a marked shift in performance, because over the past decade US equities have been the driving force behind the global equity returns,” Old Mutual Investment Group investment analyst Sehrish Kahn said.
“However, over the past year, emerging markets like South Africa, Brazil, Mexico and even China have performed better than the US.”
The rand remains anchored by firm terms of trade, resilient commodity demand, especially for precious metals, and a softer US dollar. Volatility will persist, but the local currency is better supported than in past cycles.
The rand has strengthened 10% against the dollar this year. The South African government’s 10-year borrowing yield continued to fall in November, ending the month at 8.5%, the lowest rate in almost five years.
Adam Furlan, portfolio manager at Ninety One, said South Africa’s removal from the Financial Action Task Force greylist should improve capital flows, while S&P Global’s upgrades to both local- and foreign-currency sovereign ratings have added further support.
Furlan said taken together, these factors have delivered a very favourable environment for South African bondholders
“On a 12-month view, we expect South African bonds to meaningfully outperform cash. However, after a strong rally and given an uncertain global backdrop, some short-term consolidation in yields is likely,” Furlan said.
“Our inflation forecasts remain unchanged: headline and core inflation at 3.2% for 2025, with headline inflation peaking at 3.7% in December. For 2026, we expect headline inflation of 3.4% and core inflation of 3.3%,” he said.
“Real yields have lagged, with inflation surprising to the downside and a significant inflation premium still priced into long-dated nominal bonds. We remain overweight on South African bonds — particularly longer maturities — and hold no inflation-linked bonds.”
Investment firm Anchor has picked its top five stocks for 2026: Premier, KAL Group, Optasia, Valterra and Blu Label.
Handré Retief, a portfolio manager at Novare, said the firm prefers local equities over local bonds, not because bonds are unattractive — they still offer good yields — but mainly because much of the good news seems priced in already.
“In South Africa, however, we remain constructive. Local equities look appealing. The banks, especially, have given strong updates this year. Commodity prices and improved terms of trade have worked in our favour,” Retief said.
“Foreign capital, when it returns to emerging markets, normally flows first into bigger, liquid names. With the rand potentially benefiting from a weakening dollar, South Africa could catch that bid through both bonds and equities.”
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