Luigi Marinus

The Trump administration’s recent move to impose substantial tariffs on US trading partners hangs as a dark cloud over our second-quarter outlook. If kept in place, these threaten to disrupt global trade massively, potentially dragging the US into a recession while stoking inflation. The effect on the global economy would be very negative and would have long-lasting consequences as countries including South Africa adjust to the shock. It’s hard to imagine the tariffs not being rolled back at least some degree, but even if they are, continued policy uncertainty remains a threat that could lead to persistent investor caution.

Equity markets, both global and local, have reacted extremely negatively to the tariffs thus far, and we expect heightened volatility to persist in the second quarter. In addition to global risks, local assets are also exposed to ongoing negative political news flow in the wake of the controversial budget currently testing the GNU. On both the global and local fronts, the situation remains highly fluid and we have refrained from making drastic portfolio changes for now. The current steep selloff in equities has indeed piqued our interest, but unless Trump changes his tone soon, we expect better opportunities to add exposure later in the year.

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