Introduction from Orion Investment Managers’ Managing Director, Adrian Meager

Dear Reader,

The global investment environment remains supportive, but increasingly selective as we move into 2026. Inflation continues to moderate across major economies, allowing central banks to operate closer to neutral. However, high public debt and tighter fiscal conditions limit policy flexibility and increase sensitivity to growth shocks.

Equity returns are increasingly driven by structural growth, strong balance sheets, and consistent cash‑flow generation rather than broad market exposure. Narrow leadership and elevated valuations heighten downside risk, reinforcing the importance of disciplined portfolio construction. Geopolitical uncertainty and trade frictions continue to influence regional outcomes.

In South Africa, sustained fiscal discipline and progress on structural reform remain key to maintaining investor confidence and supporting long‑term growth.

US equities were mixed in December 2025:

  • Dow Jones: +0.7%
  • S&P 500: flat
  • Nasdaq: −0.5%

Inflation eased further, with November headline CPI at 2.7% and core at 2.6%. The Federal Reserve cut rates by 25 basis points in December and signalled a more data‑dependent stance. Earnings growth remains concentrated in large technology companies, with valuations elevated at approximately 22x forward earnings.

European markets stabilised at low growth levels:

  • December: CAC 40 +0.3%, DAX +2.7%, FTSE 100 +2.2%
  • Eurozone inflation: 2.1%
  • UK inflation: 3.2%
  • Eurozone GDP growth: ~1%, UK GDP growth is forecast to moderate from 1.4% in 2025 to 1.1% in 2026.

Policy remains broadly neutral, with ECB rates near 2%, while European and UK equities continue to trade at a 30–40% discount to the US.

Asia and Japan

  • Shanghai: +2.1%, Hang Seng: −0.9%, Nikkei +0.2%

China’s PMIs edged into expansion, though GDP growth is expected to slow from ~5% in 2025 to ~4.5% in 2026.

South Africa

  • ALSI: +4.4%,
  • Financials: +7.2%, Resources: +5.6%, Industrials: +1.5%, Property: −0.4%
  • Inflation: 3.5%
  • GDP growth: 1.2% → 1.5% (2026)

Quality financials and precious metals remain attractive, while domestic cyclicals require selective exposure.

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The below FSCA regulated companies, who conduct asset management and investment services, are owned by Orion Investment Managers (OIM). These subsidiary companies operate in a number of different jurisdictions, and each provides investment management and products to their clients. Orion Investment Managers, is, in turn, owned by Spirit Invest International, which owns a portfolio of companies in the investment sector...
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