Episode Transcript
The Finance Ghost: Welcome to episode 255 of Magic Markets. It’s the first one of 2026. Moe and I went off and had a pretty good holiday. We both realised about half an hour ago that we very dorkily play the same old computer game from our youth on Steam. We should totally have arranged an online game while we were on holiday, but we didn't know this about each other.
So, if anyone else likes to open up Age of Empires II and relive their high school years, then do let us know. But for everyone else, welcome to Magic Markets. And Moe, it’s another year of us doing this every week, which is exciting.
We’ve got some cool new stuff coming this year – more on that will become apparent, I guess, in the next few weeks. But for now, it’s what people are familiar with, which is you and me waxing lyrical about the markets for 20 to 30 minutes and, in this case, setting the scene for the year ahead.
Mohammed Nalla: Indeed Ghost, just wishing all of our listeners a very happy New Year. It’s probably started out not so happily for some people out there globally and we’ll touch on some of that, but really just genuinely wishing people a prosperous, healthy 2026.
Pay attention to what matters out there. Preserve your mental and emotional space because the world is a tough space. We are going to try and unpack what that means for you as an investor and what the outlook is for the year ahead.
On those dorky games, yes, Age of Empires II. Probably one of my all-time favourite games on strategy. It’s a pity we only figured this out today, because…
The Finance Ghost: No, it’s a crying shame.
Mohammed Nalla: …we’re probably going to have to wait another year until we go on holiday again because that’s the only time we’re going to have the time to play against one another online.
The Finance Ghost: You just want to practise for a year, that’s what’s happening here. I know this nonsense.
Mohammed Nalla: Oh, absolutely! Bring it on. Ghost, it’s been such an interesting start to the year. As our last show last year, we did a retrospective – what the year actually was, what the performance of the markets was, what some of the best performing assets were.
We’re not going to go into all of that, but naturally, a calendar year just bleeds into the next, so some of those themes from last year will carry through into this year.
What we’re seeing is geopolitical risk right at the top of the agenda. That was a theme from last year – I don’t have to remind everyone of the painful memories around April last year. I know that was very costly for me personally, but happily that is in the past.
We started off 2026 with geopolitical risk around Venezuela and the US. This is just telling us that we’ve got another three years of the Trump administration still in charge, so you can expect that geopolitical risk to remain in the background.
The interesting thing is that it hasn’t had much of a bearing on markets. You’ve got US markets close to record highs. They didn’t actually have a spectacular year. If you look at the S&P's performance as a whole (I’m talking the broader US market there), it was pretty lacklustre – in the teens and thereabouts in terms of the total year performance. But that masks this massive outperformance of the tech sector, of AI, and let’s maybe use that as a launchpad.
I like to look at mega trends at the start of a year. If we rewind just over the last couple of years. Coming out of Covid, we had the mega trend around the vaccine producers – that was a massive bubble. They all rallied so strongly and then melted away because the need for that also melted away, thankfully.
Following that, we then had another mega trend, which was the rise of GLP-1 drugs. That was a mega trend that came through, and you saw a lot of those stocks outperform and then subsequently melt away.
I think, in fact, even before GLP-1, we had the whole luxury goods market. Coming out of Covid, people were YOLOing (You Only Live Once), and luxury did very well – that was a mega trend. Then you had the GLP-1s – that was a mega trend, and then it failed.
Over the last year to year-and-a-half, it has really been the AI mega trend. We saw all of that craziness come through in the market. Now the question marks are starting to come up in terms of how sustainable the capex commitments being made by these companies are, those circular investments coming through.
What about some of the choke points in terms of grid and energy infrastructure? That’s going to inform some of the mega trends for this year. I would say going into the year, you’ve got to watch AI as the mega trend at risk, because that is the current incumbent that’s driving there.
Some of the other points I want to touch on are that we’ve got an incoming new Fed chair (it hasn’t been announced yet, but Jerome Powell is arguably on his way out), and you can probably expect, from the US, a Fed chair that comes in who is a lot more amenable to what the Trump administration wants to achieve.
I would expect some pressure on short-term rates in the US. I would expect them to be a little bit more dovish than the data actually suggests they should be.
This is going to have an interesting dynamic because you’ve got that superimposed on the fiscal largesse that’s really come through in the US, which is putting pressure on the long end of their yield curve.
I know we’re talking equities, but yield curves are very important to equity valuations. If you look at that yield curve, I would expect some steepness to come through because the short end will be anchored and might move lower.
The long end is anchored to the upside because of the fiscal commitments coming through from the US. For me, that represents a little bit of a risk that you've got to pay attention to.
Then the last mega trend I want to touch on is commodity markets. We started off this year– in fact, I’ve been bullish on commodities probably for the last two quarters. And when I say commodities, let me qualify that, because last year was the year for gold and it was the year for platinum, but a lot of people were ignoring what was happening on industrial metals.
At the start of this year, you actually saw copper do remarkably well, and copper has now broken through to record high levels. Why is that the case? Again, it’s tied back into that AI mega trend – there’s electrification that’s got to go in. A lot of that infrastructure is going to require copper.
Pay attention, because copper is called ‘Dr Copper’ because it’s seen as a leading indicator for overall economic activity. That’s very important. I’m watching that because the question mark for me, Ghost, is: are we going into another commodities supercycle?
This is very important for South African investors, particularly because when the world goes into a commodity supercycle, you’ve actually got to be bullish on countries and geographies like South Africa as a commodities producer.
Copper is interesting. Silver’s been the other interesting one because silver was always viewed as the poorer cousin to gold. It’s got somewhat of a safe haven – you've got it as a precious metal – but silver also has industrial use, and a lot of that’s also tied to some of those mega themes we’ve mentioned.
I’ve set the scene somewhat, but I’m also interested to hear what your thoughts on some of these mega trends are, and then what are you seeing on the ground in South Africa that’s standing out for you, as we head into 2026?
The Finance Ghost: The copper reference is obviously well made, and that’s been really interesting to watch down here. Basically, there are mining companies that are in gold right now, and they’re just printing money by waking up in the morning.
PGMs are finally making cash at last, and I’m happy for them because, honestly, they deserve it. It’s been a long and painful journey for anyone involved there.
Then there’s kind of everyone else fighting over copper, essentially. For your traditional big coal houses, etcetera, copper is the big focus right now. It’s the "find someone who looks at you the way they look at copper" joke.
If copper disappoints in any way, shape or form, there’s a lot of money flowing into this thing, a lot of capacity, etcetera. It’s just interesting how copper has become this huge focus area.
If you look at some of the mining houses involved in other stuff, so outside of gold, PGMs, and then not necessarily copper, some pretty ugly numbers actually in 2025. That was pretty interesting, but it gets masked on the JSE by the incredible performance across gold, across PGMs.
To give you an idea, over 12 months, the Resources 10 index (RESI) is up about 137% (that obviously excludes dividends; that’s just the index itself). That was exactly where you wanted to be a year ago, and if you were in gold, you did even better than that. Some of the gold returns have been particularly insane. And if you were in PGMs towards the end of the year, that was quite lovely.
Meanwhile, back in the real world, the property ETF that I hold managed 23% in the past 12 months. Property actually had a really good year – that’s excluding the distribution, so it is closer to 30% total return. Good year for property. It just looks terrible compared to resources, but it is an objectively excellent year. Very happy with that.
Property up, mining up – that’s pretty bullish for South Africa, nothing to be upset about there. Let us look at financials because that’s also good to understand as we sort of set the scene for 2026 and what people might be looking at.
The FINI 15 (FINI) was up 19% in the past year. Now, if you go and have a look at the biggest constituents there: Standard Bank was up 30%, FirstRand 18% (so kind of in line with the index), Capitec 32% (another spectacular year for Capitec, it just never stops for them).
They collectively contribute almost half of that index. It just shows. You go and buy the index and you’re getting those three names as almost half of your exposure, and all of them had good years.
Some weak performances elsewhere, though, certainly among the banks, and a few that trailed the banks but were still okay overall, like Sanlam, up 15%. Just another really good, dependable year.
Some really solid stuff in the financial space – again, speaks to good sentiment in South Africa, decent growth. The financials are doing well. It’s a good sign for the economy.
Property, as well. Real-world assets. Yes, there’s lots of offshore property sitting in the JSE funds, but still, it’s primarily local. That’s good.
Then we look at the industrial sector, and I know you are going to want to jump in here, but I will just give you the INDI 25 (INDI) – it was up 16%. Now, you might be thinking factories, production lines, and machinery rolling off a line somewhere – it’s nothing like that.
I’ve said this before on this podcast, the INDI 25 is the ‘Polony Index’ – all of the leftovers get ground together and put in the INDI 25. Naspers and Prosus combined are 26% of the index. Not much in the way of factories and production lines going on there.
MTN, 11.5%. British American Tobacco, 8%. All the retailers are in there as well. If you want to see an indication of South African industrial plays, that’s actually not it. There are a lot of other stocks that give you a better idea of the SA Inc. story, of which I've got a few I will speak to just now.
I’m sure you want to jump in there, Moe. Just to comment, I guess, on some of those sector performances, because it’s pretty interesting.
Mohammed Nalla: I’m so glad you brought that up because the sector performances are where you see a lot of divergence between the South African market and what you saw in the US.
If you look at just last year's performance, I mentioned the S&P at a headline level, but perhaps I glossed over the sector performance.
What’s so interesting for me is you mentioned how real estate did really well in South Africa, but in the US, real estate was (and I stand to be corrected) the worst-performing sector amongst the major sector categorisations. It was the one sector that was down. It was down around 0.5%, but still negative. Remember that’s in the context of the overall market, which was up around, let’s say, 16%, and then really strong performances from other sectors that came through.
Another interesting point here is that this is all in US dollars. The rand has had a phenomenal year. Again, a lot of that is tied into: PGMs have done well, rand proxy, South Africa's done okay. They’ve had trade surpluses that have come through. While the underlying economic performance of South Africa on a growth basis has remained poor, markets have done well.
The rand, from a sentiment perspective, has done well. South African bond yields have gone lower, which means bonds have done really well. So, when you superimpose on that the rand's performance, then actually South African markets have significantly outperformed the US, in dollar terms.
Now, going back to it on a sector basis, you mentioned banks have done respectably. I was actually looking at risk-adjusted returns in the US, because financials in the US had a respectable year. They underperformed the overall S&P 500, but when you look at it on a risk-adjusted basis, it was actually one of the best-performing sectors. This again takes into account the amount of volatility that you are getting in the sector.
In the US, remember: yes, you’ve had some of those interest rate cuts that have come through. That tends to help out property – that didn’t happen last year. Some very interesting question marks rising from what’s actually happening, underlying the economy. What actually gets priced into markets versus what’s not yet priced in.
On a sector basis, Ghost, I know we discussed this off-air, so I’m not going to ask you because now you know the answer, but what surprised me is what the best-performing sector was, specifically in Q4 in the US.
I’m going to tell our listeners: it was healthcare. Healthcare was the perpetual laggard throughout last year. Even if you said, “Lots of risk out there, you've got to be defensive, healthcare should actually come through,” – healthcare did very poorly, and then they were actually the top-performing sector over Q4. That comprised almost all of their last 12 months. The last year's returns all came through in Q4.
That’s in contrast to another defensive sector, like utilities. Again, in the US, you get a nice clean look through to a lot of these sectors. You don’t really get that in South Africa, but utilities came through with around a 12.5% gain over the course of last year, but did not have a strong fourth quarter.
Going all the way back to it on a sector basis. In South Africa (I agree with you that Polony Index is the industrials), it’s not really industrial. The standout performer there is resources.
I want to unpack a couple of things you mentioned there because, going back to the copper point, there’s a corporate action around Anglo with Teck Resources up here in Canada. If I recall correctly, a lot of the narrative behind that is to try and build a global copper giant.
The interesting thing around resources is that they are very cyclical, because a lot of these companies curtail capex, and so that constrains supply. Then, when there’s constrained supply and you get a demand shock like we are seeing right now, that’s actually very bullish for the underlying commodity price.
Then these companies do really well for a short period of time, they then invest in capacity, and when they invest in capacity, that brings supply on stream. That then naturally chokes off the kind of price growth that you’ve seen. It’s not just copper. If you look at aluminium (or, as they say in North America, ‘aluminum’), also breaking out again to pretty high levels.
That electrification point is coming through, but my question specifically is: in South Africa, we know the PGMs and the gold players have done really well – are there any players that give you a nice clean look-through, specifically to the commodities that are exposed to electrification?
I’m thinking copper, I’m thinking aluminium. That comes through there. Iron ore, steel – those are more construction-based resources. I think the construction story is not really the narrative here, even coming out of China. We haven’t gone into geographies, but even coming into China, I think the story has moved on from that.
With your view on South Africa, what are some of the names that we should be looking at in that mining sector specifically?
The Finance Ghost: The only real, pure play on copper that’s close to producing and/or producing – because there is some exploratory stuff as well – would be Jubilee Metals. They recently (like very recently, as in the deal closed in the past month) sold off their South African PGMs, which leaves them only with Zambian copper.
So for me, they are like a glaring acquisition target. It’s just so obvious. I don’t know who it will be and I don’t know when it will happen (and of course, there is no guarantee, and I am truly just speculating here), but for me, it just looks so obvious. If everyone is chasing copper and they’ve created this pure-play copper, then surely they’re sticking their hand up to say, "Buy me, buy me."
Anglo is working very hard to become that pure-play scale copper story. Anyone who has been following SENS will get this joke about their ‘merger of equals’ with Teck. They’ve screamed the words ‘merger of equals’ so much, and it doesn’t take a huge amount of maths to work out that it’s not really a merger of equals.
But anyway, they’re working really hard to be pure play on copper and to get out of some of the other stuff they’re doing. So, who will get there first in terms of scale playing copper is difficult, because they each have legacy assets that they need to deal with.
Some big headaches at Anglo – De Beers is a very big one. I saw an article literally in the past week about how Botswana is starting to basically offer citizenship in exchange for investment, because they’re dependent on diamonds and the diamond story is even worse than I thought it was going to be. I was one of the first in South Africa, I think, to start writing publicly about the lab-grown diamonds thing, and I expected it to be bad. I didn’t expect it to be this bad. It really has been quite shocking.
In terms of other stocks and stuff that I wanted to talk about while we've got time and just an idea of local activity on the ground. Hopefully, you will find a few of these names interesting, Moe, it just gives you an idea of what happened in the past year.
Now we’re moving outside of indices. We’re going downstream into SA Inc. and some very specific names. I just chose them because they’re interesting, not because they are buys or sells or in my portfolio or whatever. I've got a couple of those to mention, but just some names that I think are interesting.
So, first one – AVI. Very much a local consumer stock focused on consumer brands. In the past year, 1% up. I looked this morning. It’s probably different now – it could be flat, could be slightly down, who knows? So basically, flat, that’s where it has been. That’s a really well-run company, by the way. AVI is a good business.
Balwin – property developer – up 11%. Balwin has been through some hard stuff, and that was with the help of an interest rate drop, remember. So, you would think that they would have actually beaten the index, because if you can’t beat the index as a property developer when rates are coming down and sentiment is improving, then it’s quite difficult.
Again, it’s time. It’s obviously when we’re looking at this, specifically over 12 months, so that caveat certainly applies here.
Afrimat – sad story of what happens when you go beyond gold and PGMs and there’s no copper. Remember, again, Afrimat is one of the best-run commodity and energy plays effectively in South Africa. Really, really good business, they do a lot of good stuff – down 38% in the past 12 months. Very nasty.
Cashbuild (indication of investment in the real economy) – down a hideous 36.5%. In this particular case, they came into the year on a high. What I should have done, because the previous year I had bought Capitec, then it spiked like crazy. I should have sold. Instead, I was like "Oh no, I think it's a nice long-term story."
Anyway, I’ve now ridden it all the way back down basically to where it started, so go figure. Sometimes you just need to actually take the money and go away, as opposed to trying to do the whole long-term lens. Not a lot of investment came through in the real economy in the past year, certainly not as much as anyone hoped.
Hudaco, pure-play industrial – well, not quite pure-play industrials, they've got some consumer products as well. But, I think when people think ‘industrials’, I think Hudaco is a very good example of what they might imagine, because even their consumer-focused products, there is still a lot of manufacturing that sits behind them. It’s actual real assets landing in the hands of consumers. That’s flat over the past 12 months.
And then the last one is KAP – they’re down 30%. Lots of problems there. They’ve had a horrible time. It actually started to look a bit better recently, which is nice, but that’s another good indication of just local activity in areas like plastics, like timber. I think they have a mattress business. They've got a lot of other stuff.
If you really dig down into SA Inc, it was not a good year, actually. It really wasn’t. The JSE was driven by gold and PGMs and financials, and some other good stuff – telcos had an incredible year (thank you African currencies, not SA Inc. story).
The big question going into 2026 is, actually, will we now see momentum in some of these names? Will the money that has flowed into mining and come to South Africa trickle down into these genuine South African midcaps, these SA-focused stocks?
They underperformed dramatically in 2025, and if the rand carries on with what it’s currently doing, the rand hedges are not necessarily going to have a great time in 2026.
Obviously, you have to be super careful. What the rand is doing versus just the dollar – not a lot of South African companies have American exposure, they actually mainly have European exposure, where they’ve gone offshore. Rand/euro is actually what you really need to watch. Some of these companies do have trade relations with the US, etcetera. It’s going to be a super interesting year.
I think that some of the really good stuff might happen in some of these SA Inc. names if people can pick the right ones – and try to get those themes locally and pick the stuff that’s going to do well.
That’s how I think you might beat the index this year, because last year was very much a story of one or two sectors pushing everything forward.
Mohammed Nalla: I love that, because I am old enough to remember when the JSE was effectively a resources proxy (and then it very quickly became a non-resources proxy). It was driven for the longest time by the likes of Naspers and so forth. Last year was, again, South Africa being a resources proxy. I appreciate some of those insights.
What was interesting for me was how South African financials actually outperformed global financials. They outperformed US financials in aggregate. It actually leads into where I want to take this discussion, to kind of round off our outlook for the year ahead, because we haven’t really touched on geographies.
This has been so interesting because we know about those record returns that came through from gold stocks. We know about the really strong returns that came through from the AI names in the US.
Ghost, what were some of the best-performing stocks or sectors out there? I’m going to ask you, to be cheeky here, to give me a region and a sector, because it ties very nicely into stuff we have discussed here on Magic Markets Premium.
I know the whole world is your oyster – I will maybe lead you towards a region to make this easier for you. Let’s say Europe. A European sector. Which sector in Europe has done well?
The Finance Ghost: Defence.
Mohammed Nalla: You’re just thinking of Rheinmetall, which is a great guess.
The Finance Ghost: It’s got to be!
Mohammed Nalla: Go and have a look at European banks.
The Finance Ghost: Oh, really?
Mohammed Nalla: Absolutely shot the lights out. Go look at Deutsche Bank, go look at Lloyds – I think we covered Lloyds in Magic Markets Premium a while ago.
The Finance Ghost: Best-performing?
Mohammed Nalla: Not best-performing, of course, but you’re talking 100% gains. You’re talking massive gains over the last year that have actually come through very strong. Not on all of the names, of course.
This is part of a number of things that are going on geopolitically, right? Donald Trump has actually forced Europe to boost their spending on defence. There’s some fiscal impetus coming through in Europe for the longest time. You could argue that this is really orientated, and it’s probably one of the best things that could have happened to Europe in a long time. Just get that catalyst going.
Alongside that, they’ve also got to finance a lot of this growth that’s coming through in the industrial capacity and the defence capacity and so forth. Some of that is coming through. There’s also the fact of some decoupling from the US that has come through, as well.
That has been a very interesting sector. It stood out for me, not necessarily as the best performing sector, because there are some very strong returns that have come through there.
If we also look at the world on a geographic basis – and I know you’re sceptical. I can see you’re checking my European banks there, Ghost. [laughing]
The Finance Ghost: No, no, I’m just interested by how much, so I found a European bank ETF. One-year return, up 68%. Not shabby for an ETF.
Mohammed Nalla: That’s the ETF, right? If you’re picking stronger names there, they’ve actually done much better than that.
The Finance Ghost: And that’s got the long tail of rubbish.
Mohammed Nalla: [laughing] Like the US banks index, as well. You had all the regional banks and all of that stuff.
The Finance Ghost: Buy the winners. Don’t waste your time with long-tail here.
Mohammed Nalla: On a geographic basis, the mega trend – I was maybe too early on this, but I was a big fan of China. And I still am a big fan of China, because I think the valuations in China – yes, they embed some degree of systemic risk from China (China can seize your assets, all of these things. Guess what? The US could probably do the same), but I think Chinese valuations are still compelling.
I think the Chinese market is really large, and I've got exposure to select Chinese names there – some higher quality, some lower quality. We mentioned there was a Chinese logistics group that I took a punt on last year. That’s still kind of flat.
So, those plays take a long time to play out, but China is still up there for me in terms of one of the key markets I like to get exposure to geographically.
The one that surprised me is also the performance of some of the Latin American countries. Now, not Venezuela, right? Not Venezuela, not Argentina, because Javier Milei… There’s a lot of volatility that comes through there.
But, fairly strong performances coming through in Mexican names. Fairly strong performances coming through from Brazilian names – and this is on a US-dollar basis. And, that surprised me a little bit, because LatAm was a laggard for a long time.
India, which was the darling of I think it was yesteryear, right? It’s now almost two years ago. India actually disappointed last year. And so, what I want to wrap with here is be very cautious around chasing the previous year’s winners. Because, when you looked at India, everyone said, “Ah, India. This is the emerging-markets play that’s out there. It’s definitely superior to China.”
Well, that thesis actually fizzled out last year, because a lot of that optimism was priced in, and Indian valuations were pretty fully cooked. And, I would argue, look for that. Look for what the narrative is that’s currently priced in.
Last big question mark in my head that I haven’t quite resolved yet, because it’s really on a knife's edge, is Japan. Because there are lots of fracture points coming through in Japan. Japanese yields have been rising really, really strongly.
And that’s bad news because, remember, that’s an origination area for the global carry trade. If the cost of originating that money in Japan and then investing globally becomes too expensive, you run a risk of that carry trade reversing.
And I know it’s not a new story – it’s something I’ve spoken about before; it hasn’t really come through that strongly. But for me, the jury is out on Japan.
I see a lot of optimism around Japan, but they’ve recently also had a change in government, a couple of moving parts there, and I’m not quite as bullish on Japan as some of the other people out there – and certainly not as bullish on Japan as I was over the course of the last, let’s call it, year to 18 months.
That’s pretty much my outlook for the year, at a very high level. There’s obviously a lot of detail that I’m still working my way through as I go through my quarterly reports with some of my institutional clients, but I think it’s going to be an interesting year.
I wouldn’t be outright bearish on the markets, but I do think that concentration-risk story we spoke about in the US does remain a theme that you've got to pay attention to. Personally, in my own portfolio, I have de-risked that a while ago. I still have some selected exposures, but I’m playing this a lot more defensively.
It certainly means I’m not outperforming the market as a whole when you incorporate some of the AI names, because there’s a lot of craziness that comes through there, but I am pretty comfortable with solid double-digit returns and just doing that sustainably over the longer term, Ghost.
The Finance Ghost: Absolutely. That’s the best we can hope for, really. Some of the stuff that did well for me last year that I’ll just mention because I’m holding all three still: City Lodge – got into that relatively late in the year last year, and that’s worked out really nicely so far.
Weaver Fintech was an absolute banger. That’s the BNPL play in South Africa. That I think was one of my best-performing – probably was my best-performing position last year, which is lovely.
Purple Group has been going really well, so kudos to the team there that run EasyEquities and some of the other businesses that they've got there. Really, really impressive story. And that’s it, really, in terms of what I wanted to mention, setting the scene.
I would really love to hear from our listeners what they’re buying. Are you looking offshore? Are you taking advantage of where the rand is and throwing your money at the US market, or are you actually looking close to home?
This rand/dollar thing is going to be a big part of the story this year, particularly because we cover so many US stocks. Our very first show ever on Magic Markets was about the rand and about the importance of decoupling the rand decision from the ultimate asset that you buy. That’s going to be a real feature this year.
Mohammed Nalla: In fact, to round off the show, because you’ve mentioned it and I think it’s so important – we probably need to do a whole show on the rand again because, like you say, I think it was our very first show – there have actually been some structural changes behind the rand. There’s a reason why the rand's done this well.
Yes, there is sentiment and all of that that kind of plays through, but when you generally look at traditional models around fair value on the rand, those incorporate interest rate differentials, those incorporate inflation differentials. Some of the structural shifts that have occurred over the course of the last year were due to the fact that South Africa moved its inflation target lower.
That is a structural shift. That means that the gap between South African inflation (if you believe in the SARB, if you believe they’re credible) and then US inflation (where arguably they are running it a lot hotter) – not only does that narrow, but in some instances actually reverses. And when that reverses, it means that the rand should fundamentally strengthen against the US dollar.
So, pay attention to dynamics like that, because it’s so easy to get trapped in this persistent bearish narrative around the rand. In my view, I certainly believe in international diversification, but over the last year, I haven’t been outright bearish on the rand for those reasons.
There is a structural shift in rates and inflation differentials to the rest of the world, and then, coupled on top of that, South Africa's been running those trade surpluses, and that is a tailwind for the rand.
If you wrap all of that up into a fair value model of the rand – I’m not going to go into the technicalities around that – there are some very good reasons why the rand has strengthened. That being said, prudent international diversification is definitely warranted.
Ghost, I think we’ve run out of time. I definitely want to hear from our listeners. Let us know what you thought.
One last point. There’s this whole theory out there that I’m looking and unpacking. I saw something out there around the whole ‘degen’ trade. That’s saying there is gamification of markets. It’s the rise of betting markets, it’s cryptocurrencies – how do you get exposure to that?
That’s maybe another mega trend that I haven’t yet incorporated into my overall thinking, but just pay attention there, because I think there’s maybe some sort of substance towards unpacking that thesis as we go into 2026.
Let us know what you thought of the show. Hit us up on social media. It's @MagicMarketsPod, @FinanceGhost and @MohammedNalla all on X, or go and find us on LinkedIn. Pop us a note on there.
We hope you’ve enjoyed it. Until next week, same time, same place. Thanks, and cheers.
The Finance Ghost: Ciao.
