south african market review
: 2025
SOUTH AFRICA MARKET REVIEW
The year 2025 was a strong, eventful year for financial markets. The year began with macro uncertainty and aggressive trade policy shifts which signalled economic contraction and a downturn in the stock market. After a period of policy uncertainty, economic activity accelerated in the third quarter, markets broadly delivered solid returns, driven by robust corporate earnings, largely fuelled by the continued artificial intelligence boom, and a resilient consumer.
2025 proved to be an exceptionally strong year for South African investors, with local assets delivering some of the best returns globally. Despite modest economic growth, South African markets benefitted from a combination of high starting yields, improving confidence, and supportive global conditions for emerging markets.
The FTSE/JSE All Share Index (ALSI) rose by approximately 42% over the year, marking one of the strongest annual equity performances in recent history. Returns were broad-based, supported by a recovery in resource stocks, resilient financials, and improved domestic sentiment as the year progressed.
South African fixed income was a standout performer. The FTSE/JSE All Bond Index (ALBI) delivered a return of approximately 24% in 2025, its strongest calendar-year performance on record. High real yields, easing inflation pressures, and improving sovereign credibility attracted strong local and foreign demand for government bonds.
Listed property also staged a meaningful recovery, with South African REITs gaining roughly 30% over the year, supported by declining bond yields and improved income visibility.
Currency movements played an important role in shaping returns for South African investors. The rand appreciated by approximately 14% against the U.S. dollar in 2025, making it one of the strongest-performing emerging-market currencies for the year. A favourable terms of trade supported by precious metals was supportive of the rand, alongside a softer US dollar.
While rand strength reduced returns on unhedged offshore assets when translated back into local currency, it materially enhanced domestic asset returns, lowered imported inflation pressures, and improved South Africa’s external funding dynamics.
Precious metals were the standout asset class of 2025. Gold enjoyed a record-breaking year, characterized by an unprecedented rally that saw the precious metal surge nearly 70.0%. Prices rose from roughly $2,600 at the start of the year to an all-time high of over $4,500 per ounce before settling at around $4,324.00. Strong performance from gold was driven by central bank buying as they continued to diversify their reserve holdings from the dollar, and flows from EFT funds. Silver outperformed with returns of 149% for the year.
In South Africa, resource stocks were key contributors to overall market performance, benefiting from higher gold and platinum prices amid ongoing global uncertainty. Financials also performed strongly, supported by higher-for-longer interest rates, healthy balance sheets, and improving credit conditions. Industrial shares delivered more mixed outcomes, reflecting valuation pressures and uneven global demand, while domestically oriented counters benefitted from improving local sentiment later in the year.
Globally, technology shares continued to deliver positive returns, though performance became increasingly selective as investors focused on earnings delivery and valuation discipline rather than broad AI narratives. Resources outperformed in several regions, supported by firm commodity prices, while consumer discretionary sectors lagged amid tighter financial conditions.
Global Markets: Positive Returns with Regional Divergence
Global equity markets delivered strong headline returns in 2025, though outcomes varied meaningfully by region and currency. The MSCI All Country World Index rose by approximately 23% in U.S. dollar terms for the year. However, for South African investors, rand appreciation reduced offshore equity returns in local currency terms.
U.S. equities delivered mid-teens returns, supported by resilient earnings growth, while developed markets outside the U.S. outperformed later in the year as leadership broadened. Emerging market equity performance was broad based, supported by a weak dollar, commodity prices and Asian markets outside of China reflected the spillover of AI enthusiasm. The Chinese market was supported by advances in Chinese AI boosting the tech sector, amid weaker domestic demand and property headwinds.
Global fixed income also recovered, with major bond indices posting returns of around 6–7%, as inflation pressures eased and expectations of future rate cuts gained traction.
Fixed Income: Income and Carry Took Centre Stage
Fiscal concerns weighed on government bonds and curves steepened in all major markets.
One of the defining features of 2025 was the return of income as a meaningful contributor to total returns. Higher starting yields allowed investors to earn attractive real income, while capital appreciation provided an additional boost as bond yields declined over the year.
South African bonds were particularly well positioned, combining high nominal yields with improving inflation dynamics. For income-focused investors, fixed income once again fulfilled its role as both a return generator and a stabilising component within diversified portfolios.
Final Thoughts
2025 was a year of sharp contrasts: early uncertainty gave way to improving confidence, both globally and locally. South African assets delivered exceptional returns, supported by income, valuation support, and improving sentiment.
Looking ahead, while market conditions are likely to remain volatile, portfolios anchored in diversification, quality, and sustainable income remain well positioned to navigate an evolving global environment.