Equities remain our preferred local and international asset class. The divergence in performance locally has resulted in investment opportunities becoming more apparent. The likelihood of sustained volatility in the coming months warrants a more defensive stance. Regional equity performances are likely to synchronise in the short term as heightened risk aversion leads to safe-haven investing.

Short-term cyclical factors locally, such as a negative inflation outlook and the large current account deficit, may result in further weakness in the domestic bond market. Longer-term fundamentals, which continue to favour South Africa, remain intact.