One of the things I love most about South Africa is that, come December, the entire country seems to pause together. It’s as if we collectively breathe out, take a break, and return in January a little more rested, a little rounder, and hopefully with a full heart and fresh energy for the year ahead.

So, as we brush off the last crumbs of holiday koeksisters and try to remember our email passwords, let’s take a moment to reflect on the year that was—coffee in hand—before turning our attention to the year ahead.

Global Markets in 2025: A Year of “Almost Calm”

While 2025 certainly wasn’t short on drama, global markets showed surprising resilience. Inflation across major economies continued its slow drift downward, giving central banks the confidence to begin, or at least hint strongly at, interest rate cuts toward the end of the year.

The US market led the pack in terms of headlines, with technology stocks once again doing most of the heavy lifting, even as investors questioned whether AI-related valuations had developed a caffeine problem. However, it was emerging markets that delivered the best USD returns to investors, with China, Brazil and South Africa as standout markets. A lot of this performance was thanks to strong commodity prices and the weaker USD. Europe delivered more modest gains as growth remained sluggish, while Asia offered mixed results.

In commodities, oil prices yo-yoed in response to geopolitical headlines and ended the year down close to 20%, while gold was the standout, delivering one of its strongest annual performances in decades. 2025 had all the ingredients that drive gold higher: a combination of safe-haven demand amid persistent geopolitical tensions, trade wars, recession fears, and record central bank buying that signalled a structural shift away from reliance on the US dollar. Falling interest rates and a weaker dollar further boosted gold’s appeal by reducing the opportunity cost of holding non-yielding metal.

I want to take a moment to talk about Bitcoin. Bitcoin entered 2025 behaving more like a geared equity than a hedge, with correlations to tech-heavy indices such as the Nasdaq climbing during risk-on phases. It became a more common portfolio holding due to easy access via ETFs. In fact, at one point in 2025, it was the best-performing asset class, up 100% and hitting record highs above $120,000. However, in the second half of the year, this narrative collapsed. Correlations broke down as liquidity tightened and equity markets wobbled, triggering a sharp sell-off that erased more than 30% from its October peak. The “digital gold” thesis faltered, and Bitcoin proved vulnerable to speculative flows, margin calls, and ETF outflows. By year-end, gold had cemented its defensive role, whereas Bitcoin’s volatility reminded investors that it remains primarily a risk asset rather than a reliable hedge.

Zooming in on South Africa…

South African-focused investors had a good year, as our resource-heavy index benefited from the surge in gold and platinum prices and a weaker US dollar. I closed last year by commenting on the lower inflation target for South Africa and the many benefits it will have. As an investor, South African government bonds were the direct beneficiary of this as yields fell (meaning capital gains) and investors were generously rewarded. (You will be pleased to know that we have a lot of SA government bonds in our SA WealthStrat funds.)

South Africa’s economic narrative finally showed a pulse, with structural reforms — although slow — beginning to build confidence among businesses and global investors alike.

In short, 2025 was proof that even in a world filled with uncertainty, disciplined investors were rewarded.

What to Expect in 2026: A Year of Normalising… Hopefully

2026 is shaping up to be a transition year, one where markets begin to feel more “normal,” even if global politics refuses to cooperate. Ahem… Venezuela…Let’s digress quickly…

The immediate narrative in the media suggests a period of potential chaos. You have likely seen reports warning of spikes in oil prices or a rush to “safe-haven” assets like gold. While these stories are good reading, it is helpful to distinguish between political drama and financial reality:

The “Oil Shock” Fear: While Venezuela holds massive oil reserves, its actual role in the global market is far smaller than it was decades ago. Currently, it represents only about 1% of the global supply. This means the modern energy market is likely far more resilient to disruption from this region than it would have been in the past.

The Price of Fear: Markets may be volatile in the coming days as traders price in a “fear premium”. However, reacting to this now usually means acting on information that is already reflected in prices.

This is unfolding as I type, and so we are zooming out and focusing on fundamentals rather than short-term shenanigans.

Predicting what will happen is not a skill we possess, but we can look at what is priced into markets and assess whether we think this is rational or not.

Here’s what the road ahead is likely to feature, given what markets have priced in:

• Gradual interest rate cuts: Most developed market central banks are expected to ease policy cautiously. No one wants a repeat of inflation’s comeback tour of 2022, so expect gentle trimming rather than dramatic slashing.
• Slower but more stable global growth: The US may cool slightly from 2025’s momentum, Europe may continue its slow shuffle forward, and emerging markets, especially India and parts of Southeast Asia, could remain bright spots.
• AI continues to dominate… but with more regulation: 2026 may mark the year policymakers start catching up to AI’s explosive growth. Don’t worry, innovation will continue. It may just come with a longer “terms and conditions” page.
• Volatility remains part of the backdrop: Geopolitics, elections in major economies, and the ongoing reordering of global supply chains mean markets will continue to dominate headlines. But with stronger global balance sheets, investors are far better placed than they were a few years ago.

As we look to 2026, we won’t pretend to predict markets; doing so is a sure way to look foolish. In the short run, luck can make you look clever, but over time, it fades, and only hard work and a disciplined, repeatable process endure. That’s where we focus. Our investment approach is not reliant on bold calls or market timing. We pay close attention to expectations so that we’re aware of potential headwinds and tailwinds, but it’s the fundamentals: quality, valuation, cash flows, balance sheets, and sensible risk exposure through sizing our allocations that ultimately drive how we construct our portfolios.

We also believe diversification is the ninth wonder of the world (with compound interest the eighth). It’s why our portfolios remain broadly diversified and deliberately not geared to a single outcome. Whatever 2026 brings, we’ll continue to apply the same patient, evidence-based process on your behalf, embracing the occasional good fortune when it arrives, but never depending on it. Thank you for your continued trust.

Navigating the Tides on Classic Business

Each Friday, just after the 6pm news, WealthStrat Managing Director Victoria Reuvers joins Michael Avery on Classic Business to cut through the headlines and unpack the week’s market moves in a clear, practical way.