The spate of good news that has driven South Africa’s markets upwards is now largely built into prices, and a cautious approach is needed when making investment decisions.
This is the view of Prescient Investment Management chief investment officer Bastian Teichgreeber, who said in an interview that the tailwinds lifting markets and the currency had faded, with several potential headwinds ahead.
Positive developments that had buoyed market sentiment had been the lifting of South Africa’s greylisting by the Financial Action Task Force, the credit ratings upgrade by Standard & Poor’s, the low inflation target of 3%, the credible medium-term budget policy statement tabled by finance minister Enoch Godongwana last month and the successful G20 summit hosted by South Africa.
These trends had seen the All Share Index on the JSE gain 37.8% this year, the rand strengthen to below R17 and a stronger bond market, all rising from the very undervalued equity and bond markets and cheap currency that prevailed at the start of the year.
The global market at the time was also very resilient and strong, and the US Federal Reserve was committed to cutting interest rates.
“Our take is that a lot of the good news is in the price, and from here there will be fewer tailwinds than we saw in 2025. From here we see a few more headwinds, and from an investment point of view, that means you want to be slightly more cautious, especially if you have enjoyed that great rally in South African assets that we have seen so far,” Teichgreeber said.
It was not possible to predict when the rally would end, but a plateau was likely in the future.
Of concern was the future outlook for the US economy, crucial for the well-being of economies in the rest of the world, including South Africa.
The Federal Reserve was not that committed to cutting interest rates any further, and the US economy was showing signs of weakness, while there was even the risk of a recession, which would have a negative effect on the South African economy. There were already worries about the European and Asian economies.
“We think there are more risks than opportunities in 2026. “Asset classes in South Africa are not that cheap anymore,” Teichgreeber said. This applied to nearly all asset classes globally as well.
“It is hard to find investment opportunities in the riskier asset market, but there may be opportunities in South Africa in the front end of the yield curve, basically where interest rates are still high and attractive despite very low inflation.”
Teichgreeber believed it was still advisable to have about 45% of one’s portfolio in offshore assets — the maximum allowed under Regulation 28 — not because Prescient was negative on South Africa but more because of the vast opportunities offered globally and the diversification this provided.
“Whatever your view on South Africa, whether it is positive or negative, it almost doesn’t matter. You should have a diversified portfolio, and that includes a lot of global assets. A broad, diversified portfolio is important, as we don’t know what the future holds,” he said.
Commenting on the future of the rand, Teichgreeber believed that the good news that South Africa had benefited from was already in the price of the currency.
He warned against relying on human bias in making investment decisions, particularly fear and greed, and relying too much on past trends as a predictor of future outcomes.
