Emerging markets, including South Africa, have defied geopolitical tension, posting strong gains in their currencies, equities and bonds as investors seek higher yields and diversification away from US assets.
For South Africa, analysts said favourable macroeconomic conditions, commodity strength and structural improvements in the economy are driving the rally.
The JSE all share index is up 5% this month, largely fuelled by precious metals miners, which now account for about 23% of the index’s value.
Gold and platinum companies have benefited from global uncertainty and firm commodity prices, with gold rising more than 64% in 2025. These gains have supported the total return on South African equities and helped rekindle foreign investor interest in the local market.
Regenesys Business School chief economist Annatjie van Rooyen said emerging markets, including South Africa, are performing well on global financial tailwinds, which matter more to markets than geopolitical headlines.
“Tailwinds are being fuelled by an upward revision of the global economic growth estimate for 2026 by the IMF to 3.3% from 3.1% previously,” Van Rooyen said. “Key drivers of growth are represented by technological investment, fiscal and monetary support, accommodative financial conditions and private sector adaptability.”
Tariff threats and Greenland
Van Rooyen said the weaker dollar is driven partly by tariff threats by President Donald Trump against European states opposing his planned acquisition of Greenland and by expectations of lower global interest rates. While those tariff threats have reportedly been paused after diplomatic engagement, the episode contributed to further dollar weakness and heightened investor appetite for higher‑return assets.
“This dynamic has made emerging market assets more attractive after years of underperformance, particularly given their currently favourable valuations,” she said, adding that many South African companies earn significant revenue in hard currency, providing a natural hedge against elevated global uncertainty.
These dynamics are further supported by a broader reassessment by global investors of the US as a secure and reliable investment destination under the second Trump administration.
The unpredictability of US policymaking, with global exposure to US assets, has eroded the traditional safe-haven role of the dollar and treasuries, said Momentum Investments head of asset allocation Herman van Papendorp.
“As such, this has provided support for non-US equity and bond markets as well as gold and related precious metals, as global investors start to diversify some of their new investment flows away from US assets, particularly in a weak dollar environment.”
Emerging markets
Van Papendorp said a weaker dollar is helping emerging market stocks in several ways. It increases returns for investors in these markets, raises prices for commodities that countries such as South Africa export and lowers the burden of debt for companies and governments that owe money in dollars.
“Emerging markets and South African capital markets are benefiting from this scenario.”
Precious metals have been a major contributor to South Africa’s market performance with platinum and gold miners driving much of the country’s equity gains.
“For South Africa specifically, platinum and gold miners have been primary drivers of the country’s total return,” said Shaun Murison, senior analyst at Rand Swiss. “This is very supportive of the country’s key commodity exports and it is a trend that is continuing in 2026.”
Domestic factors have also strengthened market confidence. Analysts point to moderating inflation, anchored by a lower target of 3%, improved electricity generation and logistics infrastructure, removal from the Financial Action Task Force greylist and ongoing debt stabilisation efforts. Van Rooyen said these structural improvements enhance investor sentiment and the overall investment case for South Africa.
The rand, which is often a barometer of sentiment towards emerging markets, is at its best level since August 2022. By 5.15pm, it had firmed 0.38% to R16.19/$.
The yield on 10-year blended government bonds was last at 8.27%, its lowest in two weeks.
Murison warned that volatility could return quickly if global financial conditions tighten or geopolitical tension escalates.
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