Jessica Fannin

Interest rate cuts will commence in Q4, but monetary policy committees in South Africa and the US have had reason to commence cutting interest rates already. Our expectations are that interest rates will not necessarily be cut as deeply as the markets are currently expecting. We also expect that interest rates will remain real for the foreseeable future, and monetary policy will be kept relatively tight.

This, coupled with persistent low economic growth, paints a backdrop of remaining headwinds for risk assets. The attractiveness of local bonds and local equities has reduced somewhat compared with a year ago, but our local asset classes still appear cheaper than foreign alternatives. Emerging markets, including Asia, could benefit from stronger economic recovery, supported by domestic consumption and government policies.

This environment calls for diversified portfolios to manage both risk and opportunity across asset classes, with reduced overweights compared with previous quarters.