Defying global trends, SA investors eye stronger 2026

South African markets defied global trends in 2025, boosting investor and fund manager optimism heading into 2026. However, this upbeat outlook is tempered by a critical reminder: staying disciplined and focused on market fundamentals remains essential.

“Markets surged in 2025, influenced by geopolitical factors,” says Rafiq Taylor, Head of Implemented Consulting at Sanlam Investments Multi-Manager. “However, this has led to some complacency about how returns were achieved, with strong performances coming from only a few stocks, both locally and globally.” 

This means a few top performers overshadowed a relatively flat market. Taylor says, “The broader economic backdrop is a steady slowdown. Not a recession, but inevitable deceleration. Expensive shares stayed high, while the rest of the market remained cheap.” 

Meanwhile, resources rallied to an extent not seen in many years. “The resource counters were driven hard by precious metals – particularly gold, which had an exceptional year,” says Taylor. 

South African markets bucked the global trend, driven by improving fundamentals. Taylor says, “The credit rating upgrades by S&P, and Fitch keeping the rating with a stable outlook, had a notably positive impact. In addition, a current account surplus from tax collections due to the commodity boom provided tailwinds that gave our economy positive momentum.” 

Despite these gains, 2025 was marked by a string of ‘noisy’ geopolitical events that affected the local bourse. This was reflected in some sectors, including retail and selected South African-linked industrials, yet the narrow part of the market that was performing continued to generate solid – and surprising – returns. “Five years ago, very few analysts would have predicted the South African All Share Index outperforming the S&P 500 in dollar terms,” says Taylor. “But that’s what happened in 2025, by a margin of 54% to 17% to 5 December 2025.” 

In addition to strong equities, the period also saw a broadly undervalued rand – some asset managers put fair value at around R15 to the US dollar – and South African bonds that outperformed many global peers. The FTSE/JSE All Bond Index (ALBI) returned about 14% year to date by September 2025, after a 17% gain in 2024. “The conventional wisdom is that bonds are not supposed to give you those kinds of returns,” says Taylor. “If you were invested in South African bonds, you would have had one of the most advantageous years in terms of bond returns in 2025.” 

All these pleasant investment surprises reinforce an important principle: investors should avoid a one-sided approach. “Investors and fund managers should always be thinking about those ‘what if?’ scenarios and position themselves accordingly – especially those who have a lot of South African exposure,” says Taylor. 

With buoyant bonds, solid equity returns, strong commodities, and a rallying rand, investors enter 2026 feeling upbeat – or at least cautiously optimistic. 

“The mood in our corner of the investment community is positive,” says Taylor. “Although global tech stocks are expensive, the rest of the market (notwithstanding the commodities) is still quite cheap going into the new year. Our strategy at Sanlam Investments Multi-Manager is to remain overweight on equities, with a view to reducing our South African equity exposure in favour of international equities, particularly emerging-market equities. South African bonds remain attractive too, even though they have run so hard. If bonds are still delivering 8% and inflation is targeted at 3%, that would mean a real return of 5%, which is quite attractive.” 

The positive outlook for 2026 may seem at odds with news headlines around South Africa’s strained diplomatic relationship with the United States – along with the lingering memories of 2025’s delayed National Budget. But as Taylor points out, the prudent investor isn’t distracted by political noise. 

“The investment approach is long-term,” he concludes. “And if your investment goals are short-term in nature, then you need to size your risk appropriately. Following the news is important, but the headlines matter far less than having a solid financial plan that aligns with your goals. And once you have that plan, stick to it.”