Financial Market Outlook 2025: Embracing Local Markets
Momentum Investments recently released its 2025 Financial Market Outlook report, titled “Loving Local,” emphasizing a strategic preference for South African assets over global alternatives. This choice is based on stronger local fundamentals, attractive valuations, and expected rand strength.
The report highlights several key takeaways:
– The preference for local assets over global ones in the next year is supported by superior expected fundamentals, favorable valuations, and anticipated rand strength.
– Previously challenging factors for the South African economy, like load shedding and policy reform delays, are now shifting to support growth.
– Attractive local equity and bond valuations, coupled with an appealing real yield from SA cash, are expected to drive returns.
– While US bonds have relative advantages over US equities in terms of valuations, near-term prospects for equities compared to bonds could maintain this gap.
– The uncertainty surrounding President-elect Trump’s policy implementations in 2025 increases risks of either negative or positive surprises that could affect global markets.
– A collapse of the government of national unity poses the main risk to South Africa’s positive economic and financial market environment.
As we head into 2025, the outlook for the financial market suggests a strong preference for local assets due to promising economic factors and valuation signals. Keeping an eye on global market uncertainties and policy changes will be crucial for navigating potential risks and opportunities.
