• Global GDP growth will slow materially over the coming 18 months.
  • US to go into recession soon. 
  • Emerging market GDP growth will likely accelerate this year on the back of China’s reopening and its low inflation rate.
  • In South Africa, inflation has declined swiftly over the past six months, and we expect rate cuts to follow over the coming year.
  • This, along with prospects of reduced loadshedding, lead us to retain our overweight call on SA Inc.

The Global Investment View distils the thinking of the Global Investment Strategy Group (GISG) that brings together the insights of Investec Wealth & Investment’s professionals in the UK, South Africa and Switzerland. The Group meets quarterly to map out our outlook over the following 18 months, setting a risk budget and identifying some of the potential icebergs that lie in the global investor’s path.

The GISG maintains its global risk budget score (-0.5 on a scale of +3 to -3), while the SA risk score has also been maintained, at +0.5 

We expect global GDP growth to slow materially over the coming 18 months, with the US likely to enter a recession soon. While this is not too different from the consensus economic forecast, it does imply that earnings will come out well below the current consensus earnings forecast. 

In addition, the US equity market offers very little margin of safety in our view. Global rates have increased rapidly and we expect they will only drift down – a headwind for both the economy and the market. The GISG global risk score remains at -0.5.

South African equities and fixed income screen as cheap, however. The prospect of reduced loadshedding over the coming year, combined with rate cuts from the SA Reserve Bank (SARB) leads us to retain our overweight ‘SA Inc’ call. 

While the election next year increases the risk that National Treasury will be less fiscally prudent than normal, we see sufficient margin of safety in South African bonds to retain an overweight position.


Developed markets outlook:
  • Developed market rates are high – and are likely to stay high for a while
  • While we expect long bond yields to drift down over the coming 18 months as growth slows, sizeable issuance from the US in particular is likely to imply that long bond yields remain at high levels relative to history.
  • High yields will have an impact on the equity market.
  • Higher rates will have fiscal effects.
  • US growth has surprised on the upside – and expectations have increased.
  • Europe to see weak growth too.


South African outlook:
  • Not too far from a cut by the MPC.
  • The South African economy is currently weak but there is a light at the end of the tunnel.
  • Bonds are our preferred asset class.
  • The equity market is cheap.
  • The rand is likely to strengthen.
  • ‘SA Inc’ is our preferred sector

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Executive view of the quarter

The GISG maintains its global risk budget score (-0.5 on a scale of +3 to -3), while the SA risk score has also been maintained, at +0.5

Click here to download the Executive Summary Q4 2023.

Read the full report for Q4

Find out why the Global Investment Strategy Group maintains its global risk budget score, while the SA risk score has also been maintained.

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