Fragility and Resilience, Part II

Global markets slumped in March as American and Israeli attacks on Iran triggered a regional war and sharp rise in energy prices. As discussed last week, this marks the fifth major crisis to hit the world in a mere six years, following Covid-19, the post-pandemic inflation surge, the Russian invasion of Ukraine, and the 2025 US tariff shock. Each time, markets bounced back quickly even though uncertainty remained. The returns over this turbulent period are probably much better than anyone would have expected had they known in advance what was coming.

Chart 1: 7-year annualised asset class returns in rand

Source: LSEG Datastream. Returns to end March 2026, inflation to February 2026

Indeed, anyone with the foresight to anticipate any of these crises, let alone all five, might have chosen to sell and wait the situation to resolve itself. In each case, they would’ve waited a long time, ultimately missing the market rebound. Chart 1 summarises the returns over the entire period from the point of view of rand-based investors, including the sharp declines in March. To the five global crises, we can also add uniquely South African ones: severe loadshedding, logistics chaos and the July 2021 riots. The South African economy struggled over this period, but the real returns local investors enjoyed in a standard retirement portfolio are nothing to be sneezed at.

The current crisis is following a similar pattern. While it is by no means over, things seem to be moving in the right direction as both the US and Iranian governments have, for very different reasons, an incentive to scale back the conflict. Talks are taking place behind the scenes, and Iran declared on Friday that the Strait of Hormuz is “completely open” though it backtracked on Saturday since the US blockade remains in place. It still means that oil ended the week sharply lower, while the dollar was weaker and equities higher. Notably, however, equities have rallied since the start of the month. Markets are forward-looking and started pricing in a de-escalation a few weeks ago already. No-one knows exactly when or how the war will end, but markets have sensed that an end is coming.

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