International
The prospect of 2025 being dominated by Trump is increasingly likely. Prepare for a potentially wild ride, which will likely lead to heightened market noise, increased uncertainty, and volatile investment conditions. In such times, it's essential to stay focused on your long-term goals.
Ukrainian President Volodymyr Zelensky's meeting with Donald Trump ended in disaster on Friday, after the two leaders engaged in an extraordinary shouting match before the world's media at the White House over the war with Russia. Trump has sided with Putin since taking over as president, shocking his traditional allies in Europe and beyond and leaving Ukraine increasingly vulnerable. Friday’s outburst was the most public display of that shift to date. Zelensky left the White House early without signing a planned minerals deal.
US stock markets fell sharply after an economic report showed American consumers are growing increasingly fearful of price increases and how President Trump’s tariffs could reignite the inflation crisis. US stocks battled as concerns over economic growth and global trade tensions weighed on sentiment. European markets exhibited a mixed performance as investors weighed corporate earnings, macroeconomic data, and central bank communications. Most Asian markets saw declines as investor sentiment was impacted by US President Donald Trump’s threat of additional trade tariffs, combined with concerns over slowing economic growth.
Gold prices surged to a record high of $2,942.70 driven by fears of a global trade war. This surge reflects increased demand for gold as a safe-haven asset amid escalating geopolitical uncertainties. It was also supported by the constant buying by central banks over the last couple of months. Its price soared by almost 50% over the last year.
Gold
Central Bank Gold (Net Purchases) - US$m
US inflation increased by more than expected last month with an annual inflation rate of 3.0%, up from 2.9% in December 2024. The increase was primarily driven by higher costs in shelter, food, and gasoline. The UK's inflation rate has also risen from 1.7% in September to 2.8% in January, driven by a surge in gas prices following Europe's harsh winter.
Trump called on the Fed to lower interest rates to go "hand-in-hand" with tariffs, but Powell has previously confirmed the Fed’s independence. The US central bank decided to hold interest rates because of significant uncertainty about where the US economy might be headed. The following chart compares the trajectory of interest rates in the US and South Africa over the last year.
United States Fed Funds Interest Rate
India and the US agreed to resolve trade and tariff rows after Trump-Modi talks at the White House. India’s inflation fell for third straight month to 4.31% in January, making a case for further monetary easing.
The S&P 500 is currently in the longest relative outperformance of the MSCI World index (ex US), supporting the valuations that the US market might be expensive.
Rolling 5-Year Total Returns
(S&P 500 minus MSCI World ex-US)
US and Russian officials have met in Saudi Arabia for talks on ending the war in Ukraine, but Ukraine itself was not included. However, there is massive significance in the venue as it signals a message to Putin that Russia’s influence in the Middle East might also be nearing an end. In an astonishing role reversal, South Africa has voted for a UN General Assembly resolution calling for Ukraine’s territorial integrity to be respected — while the US abstained from the vote because it considered the resolution to be too anti-Russian.
Hamas is set to free six more Israeli hostages Saturday 1 March from the Gaza Strip, but the exchange for hundreds of Palestinian prisoners is shadowed by heightened tension between the adversaries that clouds the future of the fragile ceasefire deal. There was a grisly and heart-wrenching dispute when Hamas initially handed over the wrong body for Shiri Bibas, an Israeli mother of two young boys abducted by militants. The ceasefire deal is still very fragile.
South Africa
Probably the biggest event for South Africa was the postponement of the Budget speech and a stay of execution on an increase in VAT. One thing is clear: the days of the ANC ramrodding policy down Parliament’s throat are over. It is also a confirmation that neither party to the GNU has the power to survive on its own. This creates an interdependent balance where all parties need the other parties to reach compromises. For the ANC this is completely new territory. What is ironic from the postponement of the budget speech is that the typical liberal views of the DA for once coincided with the conservative views of the unions. Politics never fail to amaze. The Budget had never been postponed in the three decades since the end of apartheid.
The decision by the Financial Action Task Force (FATF) to upgrade four of the six outstanding action items has been published by National Treasury and the Financial Intelligence Centre. South Africa has made significant progress in addressing 20 of 22 action items in its FATF Action Plan, with two remaining to be addressed by June 2025. If completed, South Africa could be delisted from the FATF greylist by October 2025, which should support our bond yields. The two items still not addressed relates to:
The investigation and prosecution of serious and complex money laundering and of
Terrorist financing.
Statistics South Africa (Stats SA) published an inflation rate of 3.2% in January 2025, higher than 3% in December, but slightly below the Reuters median consensus of 3.3% . The new weighting assigns increased importance to food and non-alcoholic beverages while housing and utilities, as well as transport, see a slight reduction.
The presidency is finalising the names of international envoys to be dispatched by President Cyril Ramaphosa to various countries to counter US President Donald Trump’s executive order to block aid to South Africa.
In the latest poll by the Social Research Foundation (SRF) the ANC support has dropped to 32%, but with 15% of voters still uncertain. It appears as if the bull dozing of legislations such as Bela, Expropriation and NHI has backfired as the majority of the ANC supporters are conservative by nature. It appears that the leadership in the ANC has lost touch with the person on the ground where service delivery is more important than ideological dogma. The strong drive to hold provincial structures responsible for a poor performance in the election might therefore be a waste of time.
The Auditor-General has told parliament that Eskom’s continued lack of consequence management and accountability concerning irregular expenditure is partly responsible for increased primary energy costs. The Special Investigating Unit says it has uncovered a scheme in which Eskom employees manipulated procurement processes to steal more than R1 billion, which was spilt into smaller contracts to avoid stricter oversight.
Tax collections came in just below October forecasts for the 2024/25 tax year. SARS was able to collect R1.84trn, R19.3 billion less than forecast in last year’s main budget. Two-pot retirement withdrawals released an additional R43bn into the economy.
Snippets from the market
With illegal mining and illicit financial flows on the rise, the World Gold Council is leading efforts to create a database of gold bars that will reflect whether they were responsibly mined and procured.
Botswana’s economy is set to grow 3.3% in 2025, driven by a diamond market recovery.
Federal Reserve Chair Jerome Powell told lawmakers that America’s central bank is in no rush to slash interest rates.
The ECB sees rising trade frictions and regulatory barriers as risks to eurozone growth, with US trade policy uncertainty and global demand slowing.
The DA has taken the government to court over the Expropriation Act.
With the possibility of losing AGOA benefits looming large, the competitive position of South African citrus in the US market is under scrutiny. If removed, we risk losing over a billion rands in export revenue, with 55 000 jobs at stake.
Japan’s headline inflation rate climbs to a 2 year high of 4% in January.
M23 rebels have reopened ports in two cities on the Democratic Republic of Congo’s Lake Kivu, which the UN says could facilitate access to aid.
Hong Kong’s Hang Seng Index shares hit a 3-year high, its highest level since February 2022. This supports the view that Chinese stocks are offering strong opportunities.
Gold prices soar to a record high fueled by safe-haven demand ($2940).
New Zealand’s central bank delivered a super-sized interest rate cut of 0.50% to 3.75% to boost a sluggish economy and curb rising unemployment.
Mexican economy contracts 0.6% in 4th quarter as trade tensions loom.
China came out in support of President Trump’s bid to strike a deal with Russia to end the war in Ukraine - at the G20 meeting in SA.
Opposition conservatives led by Friedrich Merz won a lacklustre victory (28.6%) in Germany. He might therefore be the next German Chancellor.
Elon Musk has once again clashed with Economic Freedom Fighters leader Julius Malema, this time suggesting that Malema should be declared an international criminal.
The uMkhonto weSizwe Party demanded an apology from its member of parliament, Duduzile Zuma-Sambudla, for insulting the party's secretary-general, Floyd Shivambu.
South African carmakers will approach the government with a plan to allow local motor companies to convert billions of rand in unused import-duty credits into the cash equivalent to reduce production costs and slash retail prices, says BMW SA CEO Peter van Binsbergen.
South Africa’s energy regulator has approved rules to compensate customers that export excess energy to the grid – a move that further incentivises using renewable energy, particularly rooftop solar. The approval of the so-called net-billing rules by Nersa is likely to lead to another surge in the purchase of solar panels.
Political parties expressed outrage over the surprise jump of load shedding from Stage 3 to Stage 6. The breakdowns seem to be under control again.
Eskom might face further financial difficulties if large industrial companies start closing their doors, like ArcelorMittal SA, the country’s largest steel manufacturer and large-scale user of electricity.
Mr Iain Williamson will take early retirement and step down as Chief Executive Officer (‘CEO’) and executive director of Old Mutual on 31 August 2025.
The country’s unemployment rate has dropped by a marginal 0.2% in the fourth and final quarter of last year. This means the official unemployment rate now stands at 31.9%.
US President Donald Trump’s executive order to halt foreign aid to South Africa does not apply to the President’s Emergency Plan for Aids Relief (Pepfar), the US embassy has confirmed.
Nigeria’s inflation rate drops to 24.48% after rebasing. Compared to South Africa it is extremely high.
Nigeria Inflation Rate
The Reserve Bank of Australia (RBA) cut its benchmark interest rate by 25bps to 4.1%.
China has strengthened its space cooperation with Africa, securing nearly two dozen agreements with various nations as it pushes to surpass the United States in the global space race.
Namibia's first president, Sam Nujoma, died, aged 95.
Some unions in the public service co-ordinating bargaining council have accepted the government’s above-inflation latest offer of 5.5%.
More than 14,000 new seed samples are headed to the Arctic doomsday seed vault, serving as a back-up for the world’s genetic codes.
Transparency International’s Corruption Perceptions Index. Denmark, with a score of 90, leads the 2024 CPI rankings as the least corrupt nation. South Africa is at number 83 with 41 out of 100, and the USA with 69 at number 15. 180 countries were ranked with Somalia last, with a score of 11.
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