Finding value in SA assets as global markets tumble

As global markets continue to tumble, investors are facing heightened uncertainty and fear for the global economy. The S&P 500 teeters on the edge of a bear market, with significant drops in crypto, oil, most commodities, and the dollar. To make sense of these dramatic shifts, CNBC Africa sat down with Skalk Louw, Portfolio Manager and Strategist at PSG Wealth. Louw highlighted the impact of the recent Trump tariffs, labeling it a 'black swan event' that has taken many by surprise. The unpredictability and escalation of tariffs between the U.S. and China have led to a significant sell-off in risky assets, creating a cloud of uncertainty in the market. Louw emphasized the importance of closely monitoring bond movements, as recent sell-offs in the bond market have added to the complexity of the situation. One of the key concerns raised was the potential signs of a hidden crisis beneath the surface. Louw pointed out that the current environment already shows signs of distress, with sell-offs in both equities and bonds. He stressed that movements in gold often signify a period of volatility and uncertainty, indicating a challenging road ahead for investors. The conversation shifted towards Federal Reserve Chairman, Jerome Powell, and the speculation surrounding the Fed's response to the market turmoil. Louw expressed doubt regarding Powell's ability to provide immediate support, given the unexpected nature and scale of the tariffs. The uncertainty surrounding the Fed's next steps adds another layer of complexity to an already volatile market. When asked about the performance of local assets in such a tumultuous environment, Louw acknowledged the tough situation investors are facing. Despite being relatively resilient compared to international counterparts, local assets, including equities and bonds, have suffered significant losses. Louw emphasized the importance of cash as a safe haven in times of market turmoil, echoing the sentiment that 'cash is king.' Looking ahead, the discussion turned to earnings expectations for South African listed companies. Louw emphasized the challenges of forecasting in the current environment, with ongoing tariff negotiations making it difficult to assess future performance. The uncertainty surrounding global trade dynamics presents a significant obstacle for analysts and investors alike. As the conversation neared its conclusion, Louw outlined key triggers that could signal a potential buying opportunity in the market. He stressed the importance of monitoring signals from major players like Berkshire Hathaway and paying attention to shifts in market sentiment. With the current landscape presenting a high level of risk and uncertainty, Louw advised caution and patience before considering any significant investment moves. In a final note, Louw warned against hasty decisions in a volatile market, urging investors to tread carefully in the face of unprecedented challenges and unknown outcomes. His insights provided a sobering perspective on the current state of global markets and the intricate web of factors at play.