It’s been a year of surprises, not just in terms of economic, political and geopolitical developments – notably, the start of Donald Trump’s second stint as US president – but also in terms of how markets responded. That is, despite all the shocks, it was a very good year for investors, particularly for South African markets, despite Trump imposing heavy tariffs on our exports and ultimately boycotting the G20 Summit.

Therefore, as we look ahead to 2026, the only thing we can say with certainty is that there will be surprises – not only in terms of politics and economics, but also in terms of how markets react. That is why we always caution against timing the markets, and instead advocate settling on an appropriately diversified portfolio, and then riding out the ups and downs.

Having said that, here are a few key things to pay attention to in 2026:

• The artificial intelligence (AI) boom has been a big support for economic growth in 2025, with companies spending hundreds of billions of dollars on datacentres. Some are calling it a bubble, but it is too soon to tell. In 2026, spending is either likely to accelerate as AI optimism builds, in which case bubble talk will build, or markets will start signalling concerns that the spending is excessive, in which case companies will scale back.
• The US Federal Reserve (Fed) has been torn between worries of sticky inflation on the one hand, and concerns over rising unemployment on the other. In early 2026, it will need to pick a lane. It must either cut rates to forestall a weakening of employment, or choose to fight inflation instead. This will have global implications, since more rate cuts will probably lead to a weaker US dollar. Complicating things is the fact that Fed Chair Jerome Powell’s term in office expires in May 2026, and Trump will appoint a successor. Therefore, 2026 will also be a pivotal year for the world’s most important central bank: it will maintain its independence or increasingly come under the thumb of the White House.
• On the domestic economic front, it should be a better year for South Africa. The Reserve Bank can cut rates again as inflation heads to the new 3% target, another credit ratings upgrade is possible, and the infrastructure cycle seems ready to finally start gaining momentum.
• Local government elections are due to be held late in 2026. The outcome will give an indication of how the political landscape has evolved. This might in turn influence coalition politics at the national level. However, even if the Government of National Unity doesn’t survive in its current form, broad policy continuity is likely.
• Finally, in terms of local markets, it is unlikely that we will experience the same booming returns from bonds, equities and property as we saw in 2025. However, valuations remain reasonable, and fundamentals are improving. Therefore, the real return outlook for patient investors remains positive, especially as inflation gradually settles near the new 3% target.