• Growth slowing
• Uncertainty has increased
• Inflation is set to slow, but to surprise on the upside
• There are risks to the interest rate trajectory
• Excess savings being depleted
• Fiscal pressures are building

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 at -1 on a scale of +3 to -3, while the SA risk score has been maintained at +0.5.

US GDP growth forecasts have been materially upgraded, even as growth forecasts for the rest of the globe have remained stable. The current consensus forecast of 2.2% seems optimistic and we expect to see downward revisions over the coming few months.

Inflation has surprised on the upside across the globe, and we expect it will continue to do so – raising the prospect of fewer-than-expected rate cuts by the Fed. In addition to the concerns above, the US market screens as expensive both relative to peers and relative to history. While the rolling out of artificial intelligence (AI) may mean that margins prove sticky, we still expect downward revisions to earnings growth over the year ahead. The net

result is we remain risk off globally. We see South Africa as offering opportunity and we are overweight South African fixed income. However, given the uncertainty around the election in May, our overweight position is relatively modest. We will look to increase our overweight should there be a market dislocation in the wake of the election.

• The Fed is set to ease up on quantitative tightening soon
• Margins have been high – can they persist?
• Earnings forecasts are still optimistic
• Chinese data readings are starting to turn
• The correlation between US equities and bonds is set to decline
• The US market is not cheap

• Election uncertainty
• The fiscal target is at risk
• The rand is particularly weak, for South African-specific reasons
• Is the performance of the state-owned enterprises improving?
• South African inflation is elevated
• The MPC is set to cut
• Fixed income should outperform when the rates are cut
• Expectations for South Africa are low
• Consumer incomes are holding up
• Bonds are our preferred asset class
• Equities are cheap
• ‘SA Inc’ is our preferred sector

The Global Investment Strategy Group (GISG) maintains its global risk budget score (-1 on a scaleof +3 to -3), while the SA risk score has also been maintained at +0.5.

Click here to download the Executive Summary Q2 2024.