Dear readers,

We are living in interesting if somewhat paradoxical times. From its baseline index of 100 in 1960, the JSE All Share Index has just powered through the 100,179. 84 mark. The rand has strengthened and held steady against the US$ this year and gold is still trading around its all-time highs. Notably, the precious metal has doubled in price since September 2022. By definition, the sustained bull run has boosted gold mining companies and together with platinum counters, has reinvigorated the resources sector somewhat. On the local market, while we analyse all sectors very closely, we watch with great interest what the ‘new’ CEO of Naspers and Prosus, Fabricio Bloisi, delivers after a year into the job.

Looking internationally, the S&P 500 and Nasdaq have both nudged new records and it’s not just the US market that is pumping. Asia-Pacific stocks have been boosted by the US-Japan trade deal that has settled on a 10 percent tariffs rate. Notably too, technology titan, Nvidia, has just become the first company to achieve a market capitalisation of US$4 trillion. To place this in context, Nvidia’s value is now greater than 97 percent of all countries’ gross domestic product.

The great AI wave continues unabated and while we know that it is a revolutionary epoch-making phenomenon, one is reminded of the words of former US Secretary of Defence, Donal Rumsfeld,

“Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don't know we don't know.”

It is clear that tech companies such as Nvidia have stolen a march on others and are riding the wave of the AI revolution, what is less clear is how disruptive AI will become in other sectors and how quickly this will happen. There will be winners and losers.

At Orion Investment Managers, we need to be fully prepared for the AI revolution and ensure that our clients benefit from it. This we commit to.

But while all of the above is positive for markets and investments, the paradoxical side of the equation is that we continue to live in times of heightened uncertainty where sober prudence is required.

Globally, the new US tariff regimes (and their impact) are far from settled, particularly between some of its major trading partners such as China. On the back of this, the Federal Reserve continues it cautious approach to interest rate management, much to the chagrin of President Trump. Any serious attempts by the White House to curb the Fed’s independence could have serious consequences.

While calmer, geopolitical risks persist. Conflict in the Middle East, the Russia Ukraine war and the bellicosity of China towards Taiwan all give pause and need to be accounted for in asset management thinking, asset allocation and investment decision making.

Closer to home, despite the JSE surge, South Africa’s underlying economic fundamentals remain challenging, particularly its anaemic economic growth, chronic unemployment, policy flux and persistent uncertainty regarding the Government of National Unity.

So, it is indeed an interesting and paradoxical environment in which we find ourselves, but amidst this, you can be assured that Orion Investment Managers will remain active, vigilant and prudent in the management of our clients’ wealth.

Until next time, enjoy the read!