Eben Louw

Heading into the second quarter of 2025, concerns around economic growth, increasing inflation expectations, and geopolitical tensions are driving significant volatility and market rotations.

Global manager positioning towards the US showed an extreme drop during March, with a notable collapse in investor sentiment. The correction has offered a more attractive long-term entry point, with improved valuations and lower concentration risk. However, concerns remain around economic growth under the prospects of trade war escalations, given the economy’s more vulnerable state (weaker labour market, depleted savings, and higher borrowing rates). 

Many policy initiatives are to the detriment of the US consumer and increasingly threatening the ‘American exceptionalism’ narrative. Elsewhere, policy shifts and valuations offer opportunities. 

European equities have had a strong rally, narrowing the valuation gap with the US. Earnings upgrades and fiscal stimulus could support further upside. In China, increased stimulus initiatives and better-than-expected economic activity could support broader optimism following recent enthusiasm for Chinese technology counters. Locally, despite the uncertain global environment, assets have remained highly resilient. 

Looking through the political headlines, the GNU seems to be holding and fulfilling its role. The improved prospects from political reform and the potential for a positive growth surprise remain in place, albeit vulnerable to external shocks. 

We are maintaining a neutral position to equities and offshore exposure, but remain well diversified across regions. We continue to hold moderate exposure to local bonds, given the attractive real yields and margin of safety in the income component.