Global Markets: AI Steals the Show

The big story of the first half of 2026 has been artificial intelligence, but perhaps not in the way you’d expect. While the Magnificent Seven (Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla) hogged the headlines over the past few years, this year they’ve actually lagged the broader market as a group. There is one notable exception: NVIDIA, which has continued to deliver and remains the undisputed engine of the AI infrastructure trade. But outside of NVIDIA, the rest of the Mag7 have struggled to keep pace, and the S&P 493, that’s everything in the S&P 500 outside those seven names, has delivered roughly double the returns of the Mag7 year to date. The market is broadening, and that’s actually a healthy sign.

The real winners this year have been the companies building the picks-and-shovels of the AI revolution. Micron Technology has been a standout performer globally, driven by insatiable demand for the high-bandwidth memory chips that power AI data centres. Taiwan Semiconductor (TSMC) and SK Hynix have similarly surged, cementing their positions as the backbone of the AI infrastructure build-out. This has had a meaningful knock-on effect for emerging markets. The MSCI EM Index has had a strong first half, but dig a little deeper, and you’ll see that the heavy lifting has largely been done by these semiconductor giants concentrated in Taiwan and South Korea. It’s an EM rally, but it’s wearing an AI badge.

South Africa: From Risk-On to Risk-Off

Closer to home, the JSE started the year on a confident note. Resources led the charge as commodity prices held up and investor sentiment toward South African equities remained broadly constructive. Industrials and financials added to the positive tone, with the market touching record highs in early February. Then came March, and the outbreak of conflict in the Middle East swiftly changed the mood. Resources, which had been the engine of the rally, gave back gains as metal prices pulled back and global risk appetite shifted. By the end of Q2, we’d seen a distinct rotation away from the risk-on, resources-driven trade that defined the opening months of the year, toward a more defensive, risk-off posture. It’s been a tale of two quarters.

Interest Rates: The War, the Oil Price, and the U-Turns

This time last year, the conversation was all about how quickly central banks would cut rates. Fast forward to 2026, and the script has been torn up. The Middle East conflict sent oil prices surging, and at its peak, Brent crude topped $110 per barrel, up close to 80% from the start of the year. Painful for everyone. That reignited inflation fears globally, and central banks that had been expected to ease found themselves either holding firm or, in some cases, hiking, including our Monetary Policy Committee, which hiked rates in May.

The picture is improving, but it isn’t resolved; it’s oscillating. Since the initial US-Iran ceasefire took shape in June, we’ve seen a pattern of on-again, off-again de-escalation: a truce forms, oil retreats, tensions flare, oil jumps again, and talks resume. Brent has swung from over $110 a barrel at the peak of the war back toward $70 during calmer weeks, then back up toward $80 whenever hostilities resurface, with the oil price effectively acting as the release valve for each turn in the conflict. Prices are quick to rise and slower to fall, but each cycle has, so far, landed a little calmer than the one before it, and inflation expectations remain more favourable than at the height of the war, with both short- and long-term market measures still sitting below pre-conflict levels. The rate-hiking cycle may well prove to have been more bark than bite. That said, we’re not back to the “cuts around the corner” world of early 2025. Central banks remain in a cautious, data-dependent mode, watching closely because this war is not over, and markets should brace for more of this push-pull before it is.

How Our Portfolios Have Navigated This

Our WealthStrat SA strategies entered 2026 with a healthy allocation to risk assets, namely equities, both domestic and global, with meaningful exposure to emerging markets too. With the exception of March, when the geopolitical shock hit, that positioning has served us well. Within our funds, we have exposure to the top two best-performing equity managers in South Africa right now, and those managers have delivered strong returns in what has been a genuinely tricky environment for active equity management. That’s something we’re proud of.

Within our Global Strategies, we’ve benefitted from our healthy emerging-markets exposure and our on-weight exposure to US equities with a dedicated small-cap allocation. This positioning has paid off as EM outperformed and the Mag7 underperformed the broader US market.

Gold has not been a contributor over the past three months, but we want to be clear about why we hold it. In our Global Core fund, we carry an allocation to both gold and infrastructure in lieu of government bonds. With the correlation between equities and bonds having increased significantly, meaning they’ve been moving together when you least want them to, these alternatives serve as genuine portfolio insurance. They protect against both a market correction and the kind of rising rate environment we’ve experienced this year. That’s exactly what they’re designed to do.

Where We See Opportunity from Here

Despite a more complex backdrop, there are clear areas where we see value heading into the second half of the year.

We remain overweight in SA equities, the structural reform story is intact, financial sector earnings are holding up well, and the rand-hedge component of the local index provides a natural cushion should global volatility pick up.

On the bond side, we’ve been trimming duration across our funds. With the SARB having hiked the repo rate to 7% in May and SA inflation rebounding to 4%, bond yields have repriced sharply, and we no longer feel duration risk is adequately compensated. We’d rather be patient here than reach for yield.

SA-listed property sits at neutral for us; the income profile remains attractive, and the offshore component insulates the sector from the local rate cycle, but a higher-for-longer domestic rate environment keeps us from adding aggressively.

Globally, we maintain our overweight in emerging market equities, particularly in Asia and Latin America, where valuations remain compelling, and growth differentials relative to developed markets are meaningful. A weaker US dollar has been a tailwind here, and several key EM economies now have room to cut rates as inflation eases.

On developed markets, we’re more selective: Europe and Japan offer better value than the US right now, where concentration risk in passive allocations remains a real concern given how much index weight sits in a handful of names. We stay cautious on US equities at current valuations. However, we do hold an on-weight allocation to the US; it’s the mix of what we own that differentiated.

On the fixed-income side globally, we prefer high-quality credit over government bonds, and EM debt remains attractive.

In closing

If there’s one thread running through all of this, it’s that markets have given us plenty of noise to react to and very little reason to do so. We stay active and nimble, but not reactive. Every shift in our positioning is grounded in fundamentals, not headlines. That discipline is what lets us look past the daily oil-price whiplash or the latest tariff tweet and focus on where the real value is building. In a year that’s tested conviction more than most, that’s exactly the approach we intend to keep.