Alexforbes: Investors must stay vigilant as economic conditions shift rapidly

Early August proved to be a challenging period for many investors, as market volatility surged, leaving those heavily exposed to carry trades and leverage scrambling to cover their positions. However, the equity market sell-off was short-lived, with a growing anticipation of lower US interest rates providing a much-needed boost to equity markets in the latter half of the month. Mandisa Zavala, Head of Asset Allocation at Alexforbes, recently sat down with CNBC Africa to discuss the implications of these market dynamics and how they are impacting investment strategies. South Africa's equity markets weathered the storm relatively well, benefiting from positive sentiment from offshore investors, despite a slight knock during the volatile period in August. Amid divergent policies from central banks like the Fed and Japan, the looming question of a potential US recession kept investors on edge at the start of the month. However, as economic data suggested a robust US economy and the Fed's proactive rate cuts, market sentiment shifted positively. Zavala highlighted the importance of remaining vigilant and forward-looking in asset allocation decisions, anticipating volatility leading up to key events like the Fed's decisions and US elections. While some investors pulled back from offshore markets, Alexforbes maintained a balanced view, being cautiously overweight on both SA and developed market equities. The firm identified opportunities in specific sectors like global healthcare and US small caps, while also finding strength in the SA property market, driven by positive local developments and innovative solutions to address challenges like overcrowded office spaces. Zavala emphasized the need for selectivity and strategic positioning in the current economic landscape, recognizing the attractiveness of both local and global opportunities. With a focus on sector-specific themes and regional dynamics, Alexforbes aims to capitalize on emerging trends while navigating uncertainties in the global economy.