Investment outlook 2026: Your risks and opportunities

South Africa shuts down over December and January. It’s a time for sunny beach days, late mornings and quiet Joburg streets. But money doesn’t rest. The holidays are a chance to review 2025 and prepare for opportunities in 2026.

Currency combed through recent outlooks from Standard Bank, Momentum Investments, Investec, Ninety One and Foord Asset Management, alongside global houses including BlackRock, Franklin Templeton and JP Morgan Asset Management. The message is not of impending doom, but of a world where selectivity, valuations and diversification matter more.

1. A messy world, but more resilient than it feels

This past year was confusing: inflation cooled but stayed sticky in places, rates fell unevenly, geopolitics flared and trade policy hardened.

Investec’s Global Investment Strategy Group is mildly risk-off. Chris Holdsworth, chief investment strategist at Investec Wealth & Investment International, believes “some caution is justified”, noting US equities trading on about 23 times forward earnings and a risk that inflation settles nearer 3% than the Federal Reserve’s 2% target.

Across managers, the expected rate-cut path is shallow. JP Morgan Asset Management expects the Fed to reduce rates “two to three times through 2026”, keeping policy only moderately supportive. In that world, high-quality global bonds again offer income and diversification.

Franklin Templeton sees global growth holding up, helped by easier financial conditions and a weaker dollar. It notes the trade-weighted dollar is already about 10% off its peak, supporting emerging-market debt and equities, and selected European stocks.

BlackRock remains pro-risk on the US AI theme, but stresses this is “a highly concentrated market” where active positioning matters.

2. South Africa’s turning point?

In an article posted on Shyft’s website, Standard Bank equity strategist Deanne Gordon says GDP growth could rise from about 1% to “close to 2%, if not slightly over 2%” over the next two years as electricity and logistics constraints ease, helped by Operation Vulindlela. Since April 2025, the local equity market has outperformed emerging markets and global equities, yet it still trades at steep discounts. Dividend yields are about 1.3 times the rest of emerging markets.

Investec’s Holdsworth points to domestic tailwinds: private-sector credit extension of about 7% year on year, some improvement at state-owned enterprises and indicators that “suggest that our market should be optimistically priced”. South African equities still trade on about 11 times forward earnings. “We think the local market is still underpriced,” he says on the company’s No Ordinary Wednesday podcast.

Foord’s Rashaad Tayob says 2025 “was a very good year”, helped by a weaker dollar, high gold prices, lower oil and muted inflation. But he cautions that 2026 will test whether the 3% inflation target can be achieved, whether government debt stabilises and whether the government of national unity holds.

3. Where the opportunities lie

a) Local growth: SA Inc at a discount

Gordon expects strong earnings growth relative to other emerging markets over the next two years, with upward revisions and above-average dividend yields.

Foord chief investment officer Nick Balkin highlights “everyday domestic businesses” – basic consumer goods, healthcare and banking – able to deliver inflation-beating returns through steady earnings and dividends.

A forceful case comes from Ninety One Value Fund portfolio manager John Biccard. He believes South Africa is at “a point where technical, valuation and macro fundamentals are aligning in a way investors have not seen for years”.

Long-dated bond yields have fallen from above 11% to the low-8% range. Biccard says this delivered returns of roughly 25% for 2025 and nearly 40% from the highs. “Those kinds of gains are extraordinary for a low-risk asset class.” Yet equities have “barely responded”.

He says a South African stock “that produced the same cash flows this year as last year should be worth around 40%-50% more today purely because the discount rate has fallen so sharply”. Local managers’ underweighting of precious-metal counters, which surged, forced the selling of domestic shares as those counters became more than a quarter of the index. In other words: they were selling cheap shares to buy expensive ones.

On fundamentals, Biccard says “load-shedding has eased, logistics constraints are improving, inflation is under control and rate cuts are expected in 2026”. Politics remains a risk, “but growth and discount rates matter far more”.

He has rebuilt exposure “overwhelmingly towards domestic equities”, with African Rainbow Minerals as a commodity holding. Bidvest remains his largest non-commodity position, trading at roughly 11 times earnings. Woolworths is another high-conviction holding, alongside Netcare and Life Healthcare, which he describes as “essentially bond proxies”. Mid caps, he says, offer free-cash-flow yields of 20%-25%, with examples including Italtile, Tsogo Sun, Rainbow Chickens, Invicta and City Lodge.

b) Local income: bonds still compelling

Ninety One’s Adam Furlan says local conditions have been unusually supportive for bondholders – inflation surprises to the downside, improved fiscal credibility and South Africa’s removal from the Financial Action Task Force greylist. He still expects nominal bonds to “meaningfully outperform cash” over the next year.

Foord favours inflation-linked bonds, arguing they offer attractive real yields and protection if inflation proves stickier than expected.

c) Offshore: beyond US tech

Global managers urge selectivity. Foord warns that US tech’s dominance leaves “little margin for disappointment”. BlackRock remains pro-risk on AI but stresses active portfolios.

JP Morgan Asset Management sees improving prospects for international equities as reforms and capital-expenditure cycles in Europe, Japan and parts of emerging markets narrow the earnings-growth gap with the US. Franklin Templeton expects a weaker dollar to support emerging-market debt and equities, and sees opportunities in Europe.

4. The pitfalls to avoid

• Chasing fads: AI, crypto, meme stocks and high-volatility trades tempt investors to abandon process.
• Over-concentration: one market – that is, the US – dominates global indices and is expensive.
• Cash and crypto traps: after-tax real returns on cash are slim. South Africa will implement the Organisation for Economic Co-operation and Development’s crypto-asset reporting framework and the updated common reporting standard from March, bringing stricter reporting requirements.
• Letting politics dictate decisions: domestic volatility will continue, but most managers remain selectively constructive.

5. Turn holiday reflection into action

• Check your asset split across local equities, local income, offshore equities, offshore income and cash.
• Rebalance intentionally – trimming US-tech-heavy exposure and adding to neglected areas such as SA Inc or quality global holdings.
• Review tax-efficient structures – use your tax-free allowance and ensure retirement-fund contributions remain aligned with your goals.
• Automate monthly investing now, before life speeds up again.

No-one can predict every twist in global politics or the exact rand-dollar rate. What is clear from the outlooks is that South Africa looks cheaper – and more resilient – than it has for some time, while global markets demand more careful security selection. In the end, disciplined diversification, a long-term perspective and a tax-efficient portfolio will matter far more than guessing the next headline.

ALSO READ:

• Know thyself: Your edge in smarter investing
• ‘It’s bumpy’: Why markets keep surprising us
• Are today’s ‘safest’ equity bets tomorrow’s risks?

_{Top image: Rawpixel/Currency collage.}