Jacques De Kock

The investment team at MitonOptimal is positive on South African risk assets going into quarter four of this year. We have an overweight allocation to SA equity and SA property on the back of improved sentiment around political and economic reforms, with valuations still looking attractive.

We are neutral on SA bonds but prefer government bonds over credit (staying away from any illiquid credit) and lean towards shorter duration to medium- and longer-term debt. Although the expected interest rate cuts could benefit longer-duration assets more, we feel that there are still too many challenges in South Africa’s economy to justify going too far out on the yield curve.

From a global perspective, we are underweight global bonds and cash and slightly underweight global equities in our local multi-asset portfolios. Even though we are still proponents of the longer-term benefits that technological advancements (specifically in AI) should have on productivity and economic growth, we are cautious on short-term market movements heading into a US election and the volatility that comes with it.

As a team, we have successfully navigated the waters of a South African election and the aftermath thereof and will now be focusing our attention on navigating our asset allocation around the US election, geopolitical risks, global rate cuts, and the effect on developed- vs emerging market risk assets.