STANLIB Podcasts

In January 2025, SA inflation increased slightly to 3.2%, which is at the lower end of the Reserve Bank target and at levels that have been under control for some time. Inflation is expected to track higher from mid-year, possibly to 4.7% by the end of December. This means the Reserve Bank can easily keep rates on hold with a slight bias to the downside.

With US President Donald Trump’s announcement of tariffs affecting Mexico, Canada and China, and increased uncertainty about the progression of the Russia-Ukraine war, evidence is mounting that uncertainty is undermining the US economy. There is a significant falloff in confidence, while inflation expectations are ratcheting up, and consumer spending declined in January.

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South African retail sales reflected a phenomenal last quarter of 2024 as consumer spending was boosted by two pot pension withdrawals. Sales in the last quarter increased by 5.4% year-on-year in real terms, indicating spending as if there was a 5% to 6% increase in the economy. These sales numbers will help to boost the economy in 2024, but this still leaves the 2024 GDP outcome at this stage at less than 1% growth. It is likely that retail sales growth will slow appreciably off a high base.

US President Donald Trump signed an array of executive orders aimed at deregulation and freeing up the US economy to perform better. But recently the focus has shifted to imposing tariffs on a wide range of countries, raising concerns of an increase in prices.

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Last week, South Africa's 2025 Budget Day was postponed, prompting significant discussions across the financial landscape. Our Chief Economist, Kevin Lings, has released a podcast that explores the current situation and outlines various scenarios for how the budget might be adapted as we approach the new budget day on 12 March. You can listen to the podcast here for valuable insights.

In January 2025, US inflation data surprised with a 0.5% m/m increase, pushing up annual inflation to 3%, which is above the 2% target. The details showed some broadening out of price pressures. This makes it likely the US Federal Reserve will hold rates for the next couple of months, which would influence other central banks, including SA.

The US has delayed until March its intended tariffs on Canadian and Mexican imports, as well as on aluminium and steel. It will also review other areas where US tariffs are lower than those of its trading partners. This is likely to lead to negotiations and will extend uncertainty around global tariffs.

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The US added 143 000 jobs in January, fewer than expected, but the unemployment rate fell to 4% from 4.1%, showing the labour market is still extremely strong. However, wage growth accelerated by 4.1% y/y. This is relatively high, and may persuade the US Federal Reserve to keep interest rates on hold for the foreseeable future as it gauges the effect of new import tariffs.

US President Donald Trump’s tariff hikes create wider concerns, given the high correlation between global trade and global growth. His executive order on SA has created tensions between the two countries, heightens negative foreign investment sentiment and raises uncertainty about the continuation of AGOA benefits.

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The fourth quarter of 2024 was interesting, Marius Oberholzer, Head of STANLIB’s Multi-Asset team, says. The stand-out event was the sweeping Republican victory in the US presidential election, which is likely to be followed by higher tariffs, corporate tax cuts and deregulation of many industries in the US. Marius believes 2025 offers a fertile environment for investment, due to, among other things, the structural shift of many economies towards services and away from manufacturing, political changes, including in SA, and persistently high interest rates. He discusses the team’s “New Regime” scenario, in which central bankers accept higher inflation to maintain growth, and what this means for equity, fixed income markets and other investment instruments.

Any commentary or forecasts indicated in this document are for information purposes only and not guaranteed to occur. Additional information about products/funds is available on the Minimum Disclosure Document/Factsheets which can be obtained from the website (www.stanlib.com).

In this podcast, Rademeyer Vermaak, STANLIB’s Head of Systematic Solutions, identifies several risks facing South African equities in Q1 2025. These include sticky global inflation, high domestic interest rates, which put consumers under pressure, lingering political instability under the Government of National Unity, and SA’s stance on Russia, China and Israel, which could alienate the US. Rademeyer identifies opportunities for the STANLIB Enhanced Multi-Style Equity Fund and discusses some of its overweight positions. He also explains why it continues to outperform its peers on a three- and five-year comparison.

Any commentary or forecasts indicated in this document are for information purposes only and not guaranteed to occur. Additional information about products/funds is available on the Minimum Disclosure Document/Factsheets which can be obtained from the website (www.stanlib.com)

Nervousness around the US election made Q4 a tough one for risk assets generally, including global fixed income, says Sylvester Kobo, STANLIB Asset Management’s Deputy Head of Fixed Income and manager of the STANLIB Flexible Income Fund, in this podcast. However, the fund returned 13.4% for the year against 9.3% for its benchmark. Many assets are still attractively valued, he says. Local bonds and property are appealing, given that domestic inflation is low and expected to average about 3.5% in the first half of 2025, so further interest rate cuts are likely. Sylvester says the main risks this year will be global, not local.

Any commentary or forecasts indicated in this document are for information purposes only and not guaranteed to occur. Additional information about products/funds is available on the Minimum Disclosure Document/Factsheets which can be obtained from the website (www.stanlib.com).

Duties imposed by US President Donald Trump on imports from Canada, Mexico and China have already triggered retaliatory measures which could easily escalate into a global trade war. These tariff hikes will have negative consequences for global inflation, interest rates and growth and it is difficult to see that the US will benefit.

Meanwhile, the South African Reserve Bank decided to cut interest rates by 25 bps, in line with expectations. Although domestic inflation is under control, further interest rate cuts are unlikely in the short term due to the current uncertainty around global trade.

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SA’s December annual inflation rate, at 3% (from 2.9% in November) was surprisingly low, showing few signs of pressure other than in administered services. This should encourage the Reserve Bank to cut interest rates at end-January by 25 bps to 7.5%. We expect the bank will remain cautious but will make a further rate cut to 7.25%, the neutral rate, by mid-year.

US President Donald Trump signed 36 executive orders in his first week. Some of the themes were: tariffs, where he imposed less than expected; energy and the environment, allowing for more exploration for oil and gas; border and immigration control; reversing various diversity and inclusion initiatives; and the federal workforce, where he introduced a hiring freeze and restructuring. For SA, new US policies on energy and immigration are likely to be the most significant at this stage. Click here to listen to the podcast.