South African markets delivered a constructive performance in July despite a challenging economic backdrop. The JSE All Share Index advanced, supported by gains in resources, listed property and large dual-listed counters, while encouraging progress on electricity supply and infrastructure reforms continued to bolster confidence. However, the local economy remains constrained by elevated borrowing costs, softer business activity and growing trade uncertainty following the implementation of new U.S. tariffs on certain South African exports. Inflation moved higher during the month, prompting the SARB to maintain a cautious stance and leave interest rates unchanged, while the rand weakened modestly against major currencies.

Globally, market performance was far more uneven. Investors grappled with rising oil prices, renewed trade tensions, higher government bond yields and growing scrutiny of the enormous capital being deployed into artificial intelligence infrastructure. Technology shares came under pressure, particularly semiconductor-related stocks, even as corporate earnings generally remained robust. Encouragingly, the broader global equity market showed resilience, with economic growth continuing in most major regions despite persistent inflation concerns and cautious central banks. The result was a market increasingly focused on select opportunities rather than broad-based gains.

Chart of the Month: Contained doesn’t mean resolved (courtesy of Ninety One)

Away from the headlines, the sell-off has stayed remarkably contained – for now. As at 23 July, EM tech hardware and semis are down 15.6% and their US counterparts have given back 5.8% since the 22 June peak, while the rest of the market has barely reacted: the ACWI ex-tech index is still up 1.5% over the same period, and software has been largely untouched. It’s a reassuring sign that this remains a valuation reset within a specific pocket of the market rather than a broader loss of risk appetite – though it’s worth remembering that we have flagged these stretched valuations for some time. Contained doesn’t mean resolved, and it’s a dynamic worth continuing to watch closely.

Our model portfolios continued to deliver solid long-term outcomes. Over the past 12 months, local growth-oriented portfolios generated returns of between 13% and 14%, while offshore equity-focused portfolios delivered returns exceeding 21% in US dollar terms. Importantly, the majority of our strategies remain comfortably ahead of their long-term return objectives, reinforcing the value of remaining invested through periods of market uncertainty.