Insights
By: Bryn Hatty
South African Q2 2025 Investment Outlook
EXECUTIVE SUMMARY
The second quarter of 2025 was shaped by a complex interplay of domestic resilience and global recalibration. Domestically, South Africa benefited from subdued inflation (headline CPI at 2.8% in May), a supportive monetary policy shift (repo rate cut to 7.25%), and accelerating infrastructure investment. Operation Vulindlela entered its second phase, with tangible progress in energy, logistics, and water reforms. Financial markets responded positively: SA equities rose 25.2% year-on-year, bonds returned 18.4%, and the rand strengthened on favourable terms of trade. South Africa is also running a primary budget surplus—estimated at 0.7% of GDP in FY2024/25—which reinforces the credibility of its fiscal consolidation path. Globally, the investment landscape was dominated by the reshaping of US trade policy. While initial tariff shocks under President Trump rattled markets, a pivot toward negotiation has since reduced uncertainty. The US dollar weakened significantly—down 10.7% year-to-date—prompting a reassessment of global asset allocations.
Despite fading tailwinds from fiscal stimulus and mega-cap tech dominance, US assets remain supported by structural strengths: productivity, innovation, and shareholder discipline. In this environment, we continue to favour a balanced and diversified approach to capital allocation—anchored in domestic opportunity, but informed by global shifts in policy, currency, and market leadership.
DISCLAIMER
This document is intended to provide only general information and to highlight points of interest. The information does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions and you may wish to consult an independent professional. Our expectations and beliefs are based on reasonable assumptions within the bounds of what we currently know. Clients have an obligation to provide Stonehage Fleming with accurate information, material facts or statements and must inform Stonehage Fleming of any information relating to the client’s change in financial circumstance, investment objectives and risk profile to enable us to make the necessary adjustments.
The distribution or possession of this document in jurisdictions outside South Africa may be restricted by law or other regulatory requirements. This document is not directed to any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) it is prohibited. Persons into whose possession this document comes should inform themselves about and observe any applicable legal and regulatory requirements in relation to the distribution into, or possession of this document in, that jurisdiction.
Where investments are involved, nothing in this document should be taken as expressed or implied indication, representation warranty or guarantee of performance whether in respect of income or capital growth. The value of investments may go down as well as up and, for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment. Past performance is not a reliable indicator of future results. Forecasts are not a reliable indicator of future performance.
Collective investment schemes are generally medium to long-term investments. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending.
There are potential material risks associated with investing in foreign securities which include but are not limited to: potential constraints on liquidity and the repatriation of funds, macroeconomic risks, political and social instability, foreign exchange risks, tax risks, settlement risks and potential limitations on the availability of market information, all of which may have an impact on performance. Where an investment is denominated in a currency other than the currency where the investor is resident, investment returns may increase or decrease because of currency fluctuations.
A schedule of fees and charges and maximum commissions is available on request. Whilst every effort is made to ensure that the information provided is accurate and up to date, some of the information may be rendered inaccurate by changes in applicable laws and regulations.
Stonehage Fleming Investment Management (South Africa) (Pty) Ltd, other affiliated companies of the Stonehage Group and directors and employees of these companies may from time to time have a long or short positions in the securities mentioned in this document and may add to or dispose of such securities.
This document is issued and approved for distribution in South Africa by Stonehage Fleming Investment Management (South Africa) (Pty) Ltd, an authorised Financial Services Provider (FSP No. 42847). Stonehage Fleming denotes that a company is a member of the Stonehage Fleming Family and Partners Group.
Download 'SFIMSA Quarterly Investment Letter Q2 2025'