The first quarter of 2026 reminded us that investors should always expect the unexpected. After a buoyant start to the year, a series of disquieting events have caused disruption, with the focus being the Iran war, which has many living under the fear and uncertainty of conflict conditions. Beyond the human toll, the war has unsettled the global economy, leading to supply shocks in the oil and gas markets, affecting the prices of global assets across the board – in particular, energy-related stocks and precious metals.
At home, the year appeared to hold much promise: Inflation seemed to be under control, and evidence of progress on South Africa’s reform agenda and infrastructure rehabilitation, in addition to increased appetite for emerging market risk, contributed to the strengthening of the rand to around R15.74/US$ during the first quarter of 2026 – a level not seen since 2022. The well-received 2026 National Budget provided a further tailwind. These factors, along with surging precious metal prices, sent the local market soaring to new highs.
However, as geopolitical tensions in the Middle East have intensified, global investors have yo-yoed into and out of emerging market currencies and assets, causing the rand to weaken and strengthen on the back of global sentiment, driven by markets wanting the conflict in the Middle East resolved. These movements in the markets and currencies underscore how quickly external global shocks can overshadow local events.
Making rational decisions in an irrational world
This Quarterly Commentary touches on several of the themes described above. Nshalati Hlungwane’s piece on investing through disruption sets the scene. In a world where AI is reshaping all aspects of life, causing uncertainty and exuberance in equal measure, Nshalati reminds us that this is not the first time a technological revolution has made waves. She takes us on a journey spanning railways and ringtones, introducing us to the successes and failures along the way. A critical takeaway: History reveals that remaining rational is key.
… long-term, valuation-oriented investing is not about predicting how change will unfold; it is about investing in undervalued businesses … that will thrive when circumstances change.
Everyone wants to know what will happen next – with the war, the markets, AI – but the crystal ball is as murky as ever. Luckily, long-term, valuation-oriented investing is not about predicting how change will unfold; it is about investing in undervalued businesses with sound economics that will thrive when circumstances change. This sums up our investment philosophy, and this quarter, we offer some neat examples of its application.
In an illustration of how a household name can hold investment potential, Jonty Fish delves into the investment case for Dis-Chem, one of the largest retail pharmacies in South Africa: a defensive business with a long growth runway, strengthening returns on capital, and a durable moat – which, in our view, is available at a fair price.
Moving from a fairly new investment (we started adding Dis-Chem to our client portfolios at the end of last year) to one that has retained a place in our portfolios since 2009, Andrew Boulton discusses Pan African Resources – our preferred gold holding and a top performer within its peer group. Our ongoing assessment of company fundamentals has led us to maintain exposure to this gold miner, which has delivered spectacular returns for our clients.
Much has changed since the start of the year that is largely outside your control. What remains in your control is your commitment to your investment goals and objectives.
We share our investment philosophy and approach with our offshore partner, Orbis, and in this dynamic, shifting investment environment, Orbis can attest to resilience, responsiveness and adaptability being key. Being adaptable does not mean deviating from our investment philosophy; on the contrary, it requires a sharp focus on fundamentals and responsiveness to new information that may change the assessment of a company’s value. Ben Preston, from Orbis, guides us through some of the disciplined decisions Orbis has made during this time of heightened volatility.
Discipline and commitment compound
Discipline is essential for sound investment decisions, but it can be difficult to maintain amid change and uncertainty. All the number-crunching, modelling and scenario-planning can go out the window in the face of the biggest disruptor of all: human behaviour. Such behaviour, shaped by recent experience and generational memory, often overrides data, history, and fundamentals. In today’s shifting environment, it is important to be aware of behavioural biases and not succumb to them, as Horacia Naidoo-McCarthy explains in her piece.
Much has changed since the start of the year that is largely outside your control. What remains in your control is your commitment to your investment goals and objectives. Linked to this is your ability to make the most of the investor-friendly changes National Treasury recently introduced.
While life is getting more expensive in the wake of the knock-on impact of oil price hikes, if you do have spare capacity, it is worth maximising your tax-free investment and retirement fund contributions. In this quarter’s Investing Tutorial, Shaun Duddy reveals the benefit of compounding by getting in early, while Daniel van Andel discusses the doubling of the single discretionary allowance – a change that gives those of you looking to increase your offshore diversification more capacity to do so – without additional admin. Our Offshore Investment Platform and Offshore Endowment are great options to consider.
In these times of ongoing volatility, I thank you for your continued trust in us.