NAVIGATING TROUBLED WATERS

Feel free to reach out to PSG Wealth Manager Jaanre Muller directly.

But uncertainty and volatility were not only limited to South Africa over the past few months. Fears of a US debt default in the event of the US debt ceiling not being raised in time, further interest rate hikes in other major international economies, a slower than expected recovery in China and a resultant decline in commodity prices are a few of the factors that shaped the past six months on the global front. However, the US market was supported by a strong recovery in the technology sector due to the growing importance of artificial intelligence (AI). An article by Reuters cites a UBS study which estimates that ChatGPT reached 100 million users in January 2023, after launching just two months earlier. In comparison, it took Instagram two and a half years and TikTok nine months to reach the same milestone.

The outlook for South Africa seems somewhat more optimistic for the second half of the year, with the risk of load shedding diminishing as the winter demand for electricity fades. Our headline consumer inflation rate is moving in the right direction and may very well fall below the 6% upper band of the SA Reserve Bank’s inflation target over the next few months. This will reduce the pressure on the Monetary Policy Committee (MPC) to increase interest rates much further. From a valuation perspective, South African assets are attractively priced and may very well spark some interest in an environment where global investors are comfortable to add some risk to their portfolios.

As an investor, you may be feeling somewhat seasick and wondering how to navigate the current investment landscape. The most important thing you can do is to stick to your investment plan, which is your compass in times of uncertainty. It will ensure that you have enough growth assets in your portfolio to meet your long-term growth goals, as well as sufficient liquidity if you need to withdraw a regular income from your portfolio. When your plan is in place, short-term tactical opportunities, such as increasing exposure to interest-bearing securities in the current high interest rate environment, can be exploited with the help of your PSG Wealth Manager.