WEF2026 | What markets will be watching in Davos

Jeremy Maggs: It is World Economic Forum Week. Markets are open, capital is moving, and in Davos, the conversation this week will help shape where risk is priced and where opportunity emerges. This is No Ordinary Wednesday, Investec’s fortnightly podcast on the forces shaping business, markets and economies. Hello, I'm Jeremy Maggs, and this week it's a special Davos debrief series. 

I'm going to bring you insights from Investec leaders attending the 56th annual meeting in Switzerland. Now, today marks the start of WEF 2026, convening global leaders under the theme, “A Spirit of Dialogue”. But the backdrop is anything but calm. The Global Risks Report 2026 warns that geo-economic confrontation has become one of the most pressing near term threats to global stability.

At the same time, the Global Cooperation Barometer 2026 tells us that cooperation across geopolitics, technology, and trade is weakening precisely at a time when systemic risks are rising. So as Davos gets underway, what signals should markets be watching and which conversations rarely matter? To help us unpack the risks, the opportunities, and what this week could mean for markets and the global economy, I'm joined by Chris Holdsworth, Chief Investment Strategist at Investec. Chris, a warm welcome to No Ordinary Wednesday.

Jeremy Maggs: The Global Risks Report 2026 ranks geo-economic confrontation as the top risk over the next two years. That's ahead of even state-based armed conflict. Chris, how should investors then interpret that finding, particularly in relation to trade tensions, tariff tensions, or supply chain nationalisation?

Chris Holdsworth: I think the essence of that report is that we're seeing a shift away from cooperation to competition amongst major economies and tariffs are an example of that. And one of the key questions that we need to answer this week, and we hope to get some guidance, is around how persistent that is likely to be.

Is it the next two years, three years, five years? Is it a long term trend or is this something that is just cyclical for the short term? And if so, what are the other consequences that are likely to come about in addition to tariffs that we need to be concerned about? And I think we will get some hints in that regard and certainly something that we'll provide an update on throughout the week as we get information, but for us, that's pretty close to the top of the list of things that we are looking out for.  

Jeremy Maggs: So let me ask you a follow up to that. Does this shift in risk weighting from traditional geopolitical fears to geo-economic friction maybe change how we think about capital allocation and diversification? 

Chris Holdsworth: Yes, it's a great question. I think the primary concern is around the extent to which the dollar continues to be a safe haven for international investors. There's a shortage of safe haven assets across the globe, and if the dollar is not going to be the sort of safe haven that it was before, it means that we need to find other safe havens and we will be looking out for any information with regard to that potential issue.

Jeremy Maggs: And Chris, are markets pricing this opportunity appropriately do you think? Or are investors underestimating the economic side of global risk? 

Chris Holdsworth: You know, it's hard to say that markets are pricing in a lot of risk when the US stock market's on a forward P/E of 23, which is pretty close to the top end of the range of what we've seen over the past 30 years. It does seem that the market's pretty relaxed and we can understand why US GDP growth has been pretty good and earnings growth has been pretty good as well.

But there is a cloudy outlook, and I would suggest that there's not a huge amount of risk currently priced in to US equities in particular. Elsewhere it's a bit of a different story, but certainly in the US it seems like a lot of these risks are being put on the back burner for now. 

Jeremy Maggs: And Chris, are markets pricing this opportunity appropriately do you think? Or are investors underestimating the economic side of global risk? 

Chris Holdsworth: You know, it's hard to say that markets are pricing in a lot of risk when the US stock market's on a forward P/E of 23, which is pretty close to the top end of the range of what we've seen over the past 30 years. It does seem that the market's pretty relaxed and we can understand why US GDP growth has been pretty good and earnings growth has been pretty good as well.

But there is a cloudy outlook, and I would suggest that there's not a huge amount of risk currently priced in to US equities in particular. Elsewhere it's a bit of a different story, but certainly in the US it seems like a lot of these risks are being put on the back burner for now. 

Jeremy Maggs: Alright, let me move on to this.

The Global Cooperation Barometer 2026 suggests cooperation is weakening even as risks intensify. So Chris Holdsworth, in your view then, are we in a world that is genuinely de-globalising or is the narrative more about reorganisation, maybe new partnerships, new corridors of capital and trade?

Chris Holdsworth: Depending on the data sources, you look at. Trade over the past couple of years has been flat to up a little bit, but in effect, no sign of deglobalisation in the trade data just yet. Clearly there are threats to that. In summary, I think we are looking at an environment where the world is just a lot more complicated.

We can't simply rely on past economic relationships between countries to continue going forward. And that just makes asset allocation a lot more complicated than it has been before. And in general, it makes investing a lot more difficult than it has been before. And again, we are going to be looking out for any information in that regard.

So we've put together a list of a couple of things and I'm sure we'll talk about that shortly, and this will feature on that list too. 

Jeremy Maggs: So what then are the investment opportunities and risks in a more multipolar or contested economic order? 

Chris Holdsworth: Well, the first question is if the dollar's not going be the safe haven that it was before, is there a substitute?

Is there something else that can offer the sort of protection for portfolios that dollar investments used to? And maybe it will be the dollar again in a couple of years, but maybe we need to try for something else. And I think that goes somewhere in expanding the recent, very strong performance in gold.

And there is a shortage of safe haven assets. And this is top of the list for investors across the globe, and again, top of the list for us this week in Davos. 

Jeremy Maggs: Now Chris, one of the central pillars of Davos 2026 is, as I understand it, unlocking new sources of growth, all well and good. Where do you see growth potential right now, both in developed economies and in emerging markets like those in Africa?

Chris Holdsworth: Well, one underreported new development we think is that GDP growth in Africa this year is likely to outpace Asian GDP growth which doesn't often happen. If you look over the last 30 years, it's occurred on a handful of occasions. Now what's more is that the IMF expects going forward, African GDP growth will be above Asian GDP growth for each of the next five years.

So we are on the cusp of a regime change and it means that the longstanding promise of faster African growth may well be delivered. And so if we are looking for new sources of growth, I think we should look probably not much further than the African continent. 

Jeremy Maggs: So are certain sectors like technology, energy transition, or even digital infrastructure maybe better positioned to capture this growth? 

Chris Holdsworth: Well, one of the problems is that there are very few ways to neatly access faster GDP growth in financial markets. So if you look for example, at listed entities in developed markets, typically Africa is a very small portion of their revenue. Even in South Africa, there's only a handful of companies that are direct plays on Africa x SA growth and that makes it quite difficult. So we first need to see increased access for investors to the African continent, and that's going to take a bit of time. That would be the initial stage of what could be a very long-running theme, and it's something that could be quite exciting and we hope to start to see some developments in that regard over the near term.

Jeremy Maggs: Now, Chris, another key theme this week is deploying innovation responsibly. Now in a world where technological disruption can rapidly reshape industries and where risks from ungoverned tech rise over longer horizons, Chris, how should investors balance their innovation upside on the one hand with systemic risk exposure?

Chris Holdsworth: That's a very difficult question. I know there are a couple of talks this week on that, and so hopefully we'll get some insights this week. I mean, one of the thoughts is that the development of AI in effect is going reduce barriers to entry, reduce moats, which means that higher quality companies, which have typically enjoyed barriers to entry and higher moats would be derated. And perhaps we've seen a bit of that over the past six months or so. 

We are not going to get an answer to that question at the end of this week, I don't think. Not a full answer, and we probably won't get an answer to this question for the next couple of years, but hopefully we get some insight with regards to the problem that you've raised.

And if so, we'll certainly report back in the follow-up sessions. 

Jeremy Maggs: Now Chris, the World Economic Forum Agenda, also emphasising building prosperity within so-called planetary boundaries. So for investors, looking beyond short-term returns, how do you think about resilience, whether for portfolios, for businesses or economies in the face of the risks highlighted in those two reports that we've mentioned?

Chris Holdsworth: You know, this is a longstanding theme, the need to invest sustainably and responsibly. The theme is not particularly popular at the moment. It's certainly less popular than it was a couple of years ago, but we do think that it's going to come back into fashion over the next couple of years. And just like the AI theme, which is likely to play out over the next decade or so, we think that this theme is likely to play out over the next few years.

Jeremy Maggs: Now as the week begins, what are the three signals or outcomes that you'll be watching closely over the next couple of days that could shift market sentiment or reshape investment assumptions? 

Chris Holdsworth: Well, as a starting point, if you look back over time, there have been a number of World Economic Forums where there's been market-moving commentary, particularly from central bankers with regards to the outlook for monetary policy. This time around the focus is more likely to be on geopolitics, but nonetheless, this is something that's going to be pretty closely watched by investors across the globe, and everyone's going to have their list of things that they're looking out for. 

In terms of our list, top of the list is to the point we mentioned earlier about the safe haven status of the dollar, and any information in that regard.

The second is around resource nationalism. This relatively new development that's come about with regards to rare earths, but it also applies to other resources more broadly, and we're looking out for any information in that regard. 

And the third is questions around Central Bank independence, particularly in the US. Now that's just the top of our list.

We've got to be open to the idea that there may well be other commentary coming through, that's out of left field that are market-moving as well. So we might not get answers to our top three. Hopefully we do, but I think we will get some information out there, even if it's not something that we are expecting at this point.

Jeremy Maggs: Alright, I want to bring South Africa into the picture now. Team South Africa is in Davos, positioning this country as reforming, stabilising, ready for partnership. From an investment perspective, how material are these signals in a world, Chris, where capital has become, I think, far more risk selective.

Chris Holdsworth: That's absolutely critical there. There's still a pretty widespread scepticism about the recovery story in SA, and it's going to take more delivery to change views and talking to people is one thing, and talking about commitments is one thing, but at this point we need to see signs of delivery and you need to evidence that delivery and you need to make it public and this is a platform to do that.

Jeremy Maggs: Now Chris, a recurring theme in the team South African narrative is that the country has moved from policy intent to implementation, particularly through Operation Vulindlela, energy reform and logistics modernisation. As a strategist, how do you then distinguish between reform rhetoric and reforms that can actually unlock capital?

Chris Holdsworth: Now this is pretty important for us. A couple of years ago, we created our own SOE index to measure the performance of SOEs in South Africa. And the reason we did that is the realisation that SOEs at that point were a binding constraint on GDP growth in South Africa. And if you look at that index, it bottomed around 2023.

And since then there's been a sizable recovery, and we can see that through electricity production as an example. We can also see it through the performance of container handling at the ports. So there's signs that things are turning around. And what that means is SOEs are less of a binding constraint on growth, and that allows GDP growth to drift upwards.

We may even see it at 2% this year. And the more we see signs of delivery in that regard, the more we see signs of structural form actually leading to better results, the more likely we are to see a reduction in the risk premium in South Africa.  

Jeremy Maggs: Alright, Chris, a final question for you then, as investors wake up to this first day of Davos 2026, looking at a world, as we've discussed of elevated global risk, weaker cooperation, but also new growth corridors, is there one thing they should be watching this week when it comes to South Africa's positioning in global portfolios?

Chris Holdsworth: I think it's the extent to which South Africa is relevant and desirable for foreign investors. And that'll take a combination of things. It'll take a combination of policy certainty, reform and signs of green shoots to convince foreigners to bother to look at SA. And there might still be some questions around foreign policy and the extent to which that affects the outlook for growth in SA, but I think the primary point is going to be trying to address investors scepticism about the recovery story in SA.

Jeremy Maggs: And that's where we are going to leave it. Chris Holdsworth, thank you for that big picture outlook and for helping us prepare for what promises to be a critical Davos week.

In episode two that drops on Wednesday the 21st of January, we're going to explore technology, artificial intelligence, and the future of work with Investec’s Global Head of Digital and technology, Lyndon Subroyen.

Until then, thank you for listening. 

Now remember to follow Investec Focus Radio SA wherever you get your podcasts. And if you like the channel, please take a moment to rate it and share it as this will help us reach more listeners. Until next time, goodbye from me, Jeremy Maggs and the entire Focus Radio team.

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