Six Key Themes for 2025
Ruvan J Grobler • January 13, 2025
This year promises to be another wild one. These talking points are all driven by external factors that we as retail investors have no control over, but it's important to consider the effect that they can have on our portfolios. Both positive and negative outcomes will hold opportunities for patient investors.
- Grey Listing: In February 2023 South Africa was placed on the Financial Action Task Force(FATF) grey list for not meeting international standards on prevention of money laundering and terrorist financing. The FATF will conduct an onsite visit in February 2025 to confirm which actions were taken and make its recommendation in June 2025. If we are successfully removed from the grey list, we can expect increased foreign investment into the South African economy.
- SA Interest Rates: In 2024 the MPC finally started cutting rates and with the final meeting in November, the MPC reduced interest rates by 25 basis points bringing the prime lending rate to 11.25%. Economists are predicting further 50-75 basis point cuts throughout 2025. I personally believe we have scope for a bit more, but we have seen the MPC to be extremely conservative.
- Donald Trump and South Africa: If Donald Trump pushes for US centred policies while renegotiating trade policies, global trade could be disrupted and might negatively affect South African exports. The AGOA agreement is set to expire in September 2025, but we hope to see it be extended again.
- US Dollar Dominance: US Centred policies may cause volatility in global markets which can strengthen the Dollar. Emerging market currencies like the Rand may then weaken. This does however create opportunities for SA investors investing in Dollars.
- Geopolitical Tension: Tensions have been high in recent years with the Russia-Ukraine conflict and recently with the Israel-Palestine conflict. We may however see tensions intensify between the US and China. This will disrupt global exports and put extra strain on China’s ailing economy. In 2024 foreign investors became net sellers of China stocks over these concerns.
- Advancements in Artificial Intelligence(AI): It’s almost impossible to keep up with the new advancements in AI we see every day. As an example, *in December researchers at Stanford John Hopkins taught robots how to do medical procedures on their own. These advancements may keep on fuelling the growth in AI and tech stocks in 2025.
*https://www.washingtonpost.com/science/2024/12/22/robots-learn-surgical-tasks/?utm_source=superhuman&utm_medium=newsletter&utm_campaign=what-to-expect-at-ces-2025&_bhlid=a0ae4312fd577606199656c699bb259e1b38726c)
Ruvan J Grobler RFP™ (PGDip Financial Planning)
How to invest in a volatile market: 3 Principles to keep in mind ‘In the short term, markets can be very volatile depending on which news story makes headlines. However, over the longer-term investors are always rewarded for staying invested and riding out the waves.’ We know this by now, we have heard it many times before and historical data proves it. Yet it’s easier said than done. When it gets to our own money we are emotionally involved and there is a part of us that believes that this time, it might indeed be different. What if the markets never recover and I suffer permanent capital loss. And with the increase power of AI and social media, it feels like my portfolio hangs on the thread of a single Tweet. In this article Stephen Bernard, an actuarial analyst form our partner Allan Gray share his views, backed by statistics and historical evidence: Read the article here: https://www.allangray.co.za/latest-insights/markets-and-economy/how-to-invest-in-a-volatile-market/
In an increasingly interconnected global economy, South African investors are finding compelling reasons to look beyond local borders when building long-term wealth. Offshore investing offers access to broader, more resilient markets, particularly in developed economies with stronger currencies and more stable political environments. Given South Africa’s constrained economic growth, fiscal uncertainty, and the rand’s vulnerability as an emerging market currency, allocating a portion of your portfolio offshore can serve as both a growth engine and a hedge. Investing offshore provides exposure to world-leading companies, industries, and fund managers that are often unavailable in the local market. It allows investors to participate in innovation-led growth in sectors like technology, healthcare, and clean energy, which are typically underrepresented on the JSE. Most importantly, it supports diversification—not just across asset classes, but across geographies, currencies, and economic cycles—reducing concentration risk tied to the South African economy. Key Reasons to Invest Offshore: Diversification: Reduce reliance on South African markets and benefit from a broader global opportunity set. Currency Hedge: Protect your wealth against rand depreciation by investing in hard currencies. Global Access: Gain exposure to top-tier international asset managers and world-class investments. Growth Potential: Participate in faster-growing economies and industries driving global expansion. Important Considerations for South African Tax Residents Before investing offshore, it’s essential to evaluate how your investment aligns with your broader financial planning, particularly around access, succession, taxation, and estate planning: Flexibility: Will you have access to your funds when needed? What types of investments can you hold? Succession Planning: Can your investment be transferred to your heirs? Will Capital Gains Tax (CGT) apply? Tax Compliance: Is the structure tax-efficient, and what must be declared on your tax return? Estate Structuring: Will your investment attract foreign estate duties? Is an offshore executor required? An Efficient Offshore Solution: The Offshore Wrapper A tailored offshore wrapper can simplify many of these complexities, offering a cost-effective and administratively streamlined solution. Key benefits include: No exposure to offshore estate duties No South African executor fees on death No inheritance tax in the offshore jurisdiction Ability to nominate beneficiaries directly for smooth succession Creditor protection for assets held within the structure Consolidation of various investments (e.g., share portfolios, funds) under one structure Minimum investment from $25,000 Tax Treatment The offshore wrapper also provides significant tax efficiency: Taxes are calculated and settled annually by the platform—no action required by the investor CGT is capped at 12%, and income tax at 30% Taxes are applied to USD returns, meaning rand depreciation is not taxed Reach out to me at ruvan@bovest.co.za for more information. Ruvan J Grobler RFP™ (PGDip Financial Planning)
