Discovery’s message for South Africans looking to invest

Discovery Invest’s latest investment market outlook for 2025 points to many unusual market conditions, but the group says there are still opportunities for investors willing to look.

The global economy is experiencing a stabilisation in key areas, with above-trend growth in the United States and a turning point in China’s recovery.

The impact of AI is also reshaping how many industries work, Discovery said.

Nevertheless, South Africa’s largest private asset manager, Ninety One, believes that South Africa’s ‘virtuous economic cycle’ provides promise for investors.

“We are navigating an atypical global environment,” said Discovery Invest CEO Kenny Rabson.

“Old investment playbooks need renewal as economies transform, new leaders emerge, and long-term trajectories shift.”

Rabson said that 2025 may be a critical year for emerging markets, including South Africa.

“There are many emerging markets that look undervalued, and I agree with Ninety One that there is an abundance of bottom opportunities,” added Rabson.

“However, against a mixed backdrop for emerging markets – for instance, because of vulnerabilities from President Donald Trump’s trade policy changes – country-specific granularity is key.”

South Africa’s momentum under the Government of National Unity (GNU) has been encouraging, Discovery Invest said.

The country also benefitted from a 10-month suspension of load shedding in 2024 and the start of 2025.

Although load shedding briefly re-emerged two weeks ago, the trajectory looks positive.

“Investors must remain aware of short-term disruptions but focus on the bigger picture: An economy that is stabilising, private-public partnerships are working, inflation moderating, and further interest rate cuts on the horizon.”

Despite the potential of AI to improve productivity, the path to realising this potential remains uncertain.

This comes amidst heightened competition, exemplified by the emergence of the new AI player DeepSeek.

Considering the global and technological uncertainties, those who maintain long-term, well-diversified strategies often fare best.

Rabson cautioned against reacting to short-term events. South African investors, in particular, have been overly conservative, which has led to many storing their wealth in cash and missing out on market rallies.

“While negative headlines may paint a picture of crisis, the reality is that markets have remained resilient over time,” Rabson advises.

“History shows that disciplined investors who maintain a well-diversified portfolio benefit most in the long run.”

Rabson’s comments align with the expectations of PSG Wealth’s Chief Investment Officer, Adriaan Pask.

Pask said that market conditions have seen major improvements in South Africa, which has led to boosts for several key assets, especially bonds and property.

He added that South Africa’s markets demonstrated resilience in 2024 despite initial concerns about inflation and interest rates.

Looking ahead, the outlook will hinge on continued structural improvements and economic policy execution.

Lower inflation and stronger nominal growth could result in a positive economic surprise in 2025.

The priority, however, lies in these improvements translating into tangible outcomes to sustain investor confidence.

Pask said that South Africa enters 2025 in a much stronger position than many had previously expected, thanks to structural reforms, inflation trends, and improving investor sentiment.