Daniel Schoeman

2024 Market Outlook: Cautiously Optimistic

Inflation and Interest Rates: Inflation may persist above the 2% level, driven by factors like wages, rents, and geopolitical tensions. Central banks will cut rates once or twice in 2024 but are expected to hold them steady thereafter.

Global Growth and Equities: While a mild recession is possible in some countries, the US is expected to avoid it. Valuations in the US stock market are considered expensive overall, but opportunities exist in international equities, particularly outside the US. Active management within the US market is recommended. While forward earnings are in an uptrend and bond yields are steady, a risk-on environment is expected, and growth assets should perform well in the short term.

Currencies and Geopolitics: The US dollar is expected to weaken slightly after initial interest rate cuts but then remain stable due to a pause in rates and potential safe-haven flows. Eurozone recovery will be gradual due to geopolitical risks, which will also keep energy prices in focus.

Emerging Markets: China is expected to recover gradually, presenting selective investment opportunities.

South Africa: The favorable election outcome has buoyed SA assets in the short term. SA equity is still undervalued, and real yields of SA bonds are still at attractive levels.

Investment Strategy: We recommend a diversified portfolio across asset classes and fund managers, with moderate exposure to risk assets and higher offshore allocations. This approach is designed to navigate the current environment by emphasizing stability with the potential for selective growth.