As we step into a new year, we are taking a broader perspective in this edition of our newsletter. Rather than focusing solely on the past month (December 2024) as we typically do, we’ll reflect on market performance for the full calendar year and the key themes that shaped investor sentiment. We will also highlight some themes we believe will drive markets in 2025.
At the start of 2024, many investors braced for a mediocre year, burdened by concerns about persistent inflation, the lingering impact of 2023’s aggressive monetary tightening, and fears of a hard landing for the global economy. Geopolitical tensions in the Middle East and uncertainty surrounding many elections which were to be held in 2024 further weighed on market sentiment, fostering a cautious outlook.
Fast forward to December, 2024 surpassed even the most optimistic predictions. Locally, domestic bonds and equities delivered some of their strongest returns in years, buoyed by renewed investor confidence following South Africa’s historic May election, where the African National Congress (ANC) lost its outright majority for the first time since independence. This political shift ignited hopes for reform and growth, fuelling the rally in South African assets. On the global front, shifting political landscapes influenced markets, but the narrative of US exceptionalism dominated, with the dollar maintaining its dominance and US equities reaching new highs.
Another significant theme of the year was the artificial intelligence (AI) boom, which continued to drive innovation and market returns.
In this edition, we’ll explore these pivotal developments and provide our outlook on the forces likely to shape the investment landscape in 2025.