South Africa’s Markets: A Quiet Outperformer in a Noisy World
By Kim Zietsman, Laurium Capital
In a global investment environment defined by uncertainty, fluctuating rate cycles and uneven growth, South African markets have quietly delivered—and in many instances, outperformed.
Recent data compiled by Laurium Capital to 30 September 2025, highlights the strong long-term performance of South African equities and bonds relative to global peers, including the United States.
Despite operating within a challenging domestic landscape, South Africa continues to offer compelling long-term value, high real-yield opportunities, and structural upside as reforms begin to take root.
How SA Has Performed Relative to the US
A striking feature of South Africa’s investment story is how well its markets have performed relative to the world’s most admired equity market – the United States.
Nominal USD Returns Over Time
Over the last 25 years, SA equities have outperformed US equities, delivering:
- SA Equities: 10.3% annualised
- US Equities: 8.8% annualised
This outperformance comes despite currency volatility, lower economic growth, and frequent political uncertainty – reinforcing the long-term strength and resilience of the JSE.
Over shorter periods, SA equities continue to hold their ground:
- Last 5 years: SA 13.7% vs US 14.6%
- Last 10 years: SA 10.6% vs US 14.9%
Meanwhile, South African bonds have delivered substantially higher returns than US bonds across all measured periods, benefiting from high real yields and consistent demand.
Real Returns in ZAR
In real (inflation-adjusted) terms, SA investors have also been well rewarded:
- SA real equity returns: 12.1% (5 yrs), 6.7% (10 yrs), 8.3% (25 yrs)
- SA real bond returns: 5.8% (5 yrs), 5.5% (10 yrs), 4.5% (25 yrs)
Source: Bloomberg
This demonstrates that South Africa has been, and continues to be, a fertile environment for generating long-term real wealth.
Outlook for South African Equities: Fundamentals Strengthening
South African equities enter the coming years from a position of relative strength and improving fundamentals.
The long-term data shows that the SA market can match—and over long cycles, even outperform—US equities.
Several cyclical and structural tailwinds are now aligning to support further upside.
Improving Terms of Trade
South Africa’s commodity-linked economy is benefiting from firmer prices in gold and platinum group metals.
This lifts earnings, boosts tax receipts, and reduces fiscal pressure.
Higher commodity prices historically spill over into stronger consumer spending—we expect this trend to re-emerge.
Supportive Consumer Dynamics
Lower inflation and expected interest-rate cuts will ease pressure on households, lifting disposable income.
Combined with the positive effects from commodity-linked income, this creates a more supportive backdrop for domestic consumption and earnings.
A More Stable Political Environment
The Government of National Unity (GNU), while not without challenges, has delivered greater political stability and renewed focus on medium- and long-term reforms.
The business environment is improving, albeit slowly, under more pragmatic, collaborative governance.
Structural Reforms Beginning to Deliver
Several reforms, initiated even before the GNU, are now gaining visible traction:
- Loadshedding has been largely eliminated, removing a major economic drag.
- Logistics infrastructure is being rehabilitated, with private-sector participation expected to significantly improve rail and port capacity over the next three years.
Progress in these areas has the potential to shift South Africa’s medium-term growth trajectory meaningfully higher.
Global Conditions Favour Emerging Markets
Macro and geopolitical uncertainties, along with a potential US rate-cutting cycle, could weaken the US dollar.
Historically, a softer dollar:
- Supports emerging-market capital flows
- Boosts commodity prices
- Improves relative competitiveness
South Africa stands to benefit more than most from this dynamic.
Attractive Valuations
Despite the improving outlook and long-term relative outperformance, SA equities still trade at substantial discounts to both developed and emerging-market peers.
This creates a highly attractive entry point for investors seeking value, yield, and real return potential.
Key Takeaways
- Global markets – particularly the US – appear expensive, pricing in a high degree of optimism.
- Macro risks, geopolitical pressures and declining rates and diversification away from the US dollar, may continue to add pressure to the US dollar, a tailwind for emerging markets like South Africa.
- South Africa’s market performance has been strong but narrow, driven by largely precious metals and Prosus, while domestic sectors have lagged.
- A weaker USD, stronger precious metal prices, the new inflation-targeting framework, and ongoing domestic reforms create powerful tailwinds for SA domestic equities, improving prospects for a broader market re-rating. We have largely seen these tailwinds priced into SA government bonds, along with a credit rating upgrade from S&P. However, this has not been priced into domestic focussed SA Inc shares.
Conclusion: A Mispriced Opportunity in Global Markets
South African equities and bonds have delivered exceptional long-term returns – often surpassing the United States – despite operating within a far more challenging macro environment.
With improving terms of trade, strengthening domestic fundamentals, reform momentum and favourable global conditions, the outlook for SA equities is increasingly constructive.
For investors willing to take a medium- to long-term view, South Africa remains one of the most attractive and underappreciated opportunities in global emerging markets.
The foundations for a multiyear re-rating are in place, and the value on offer remains compelling.
For more information on how to access these market opportunities and grow your wealth, contact Laurium Capital at [email protected] or visit www.lauriumcapital.com.
Laurium is an authorised financial services provider (FSP 34142).
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