Strategic Outlook for 2026

Key investment themes:

• Narrow US equity leadership increases return asymmetry
• Gradual monetary easing keeps rate volatility elevated
• Divergent global growth: US resilient, Europe stabilising, Japan structurally accelerating, Asia selective
• Credit spreads tight; careful issuer selection essential
• South Africa offers attractive real yields, but remains fiscally sensitive

Portfolio implications:

• Focus on structural growth, high-quality companies and sectors benefiting from AI and automation
• Maintain regional and sector diversification to manage risks
• Use intermediate-duration fixed income and selective credit to balance carry and volatility
• In South Africa, monitor reform progress and fiscal discipline for investment opportunities

Markets remain supportive, but selective. Disinflation and gradual monetary easing provide a constructive backdrop, yet elevated valuations, narrow leadership and fiscal/geopolitical risks limit the margin for error.

Returns will be driven more by disciplined asset allocation, regional and sector differentiation and security selection than broad market exposure. Investors prioritising resilience alongside growth are best positioned as the cycle matures.

Equities offer long-term opportunities, particularly where structural growth, strong balance sheets and pricing power intersect. In fixed income, carry and intermediate-duration strategies remain attractive, while tight credit spreads favour selective, high-quality exposure.

For South Africa, attractive real yields and improving reform momentum provide compelling opportunities, contingent on fiscal discipline and global risk sentiment. Active risk management, diversification and selectivity will be central to navigating 2026.

We trust you have enjoyed and benefited from this report and please do not hesitate to contact Orion Investment Managers at: info@orionim.biz should you have any questions or queries.

Sincerely,

Adrian Meager
Orion Investment Managers
Managing Director and Chief Investment Officer