South Africans worried about the economy are facing a divided picture: global uncertainty is growing rapidly, but parts of the local market are still showing resilience and even opportunity.
Investment professionals say geopolitical tensions, volatile oil prices and expectations of interest rate changes have made global markets increasingly volatile.
Yet, at the same time, South Africa's improving fundamentals and relatively low valuation are keeping it on investors' radar.
Markets remain volatile due to global uncertainty
Investors are grappling with increased global risk.
Rising oil prices, the war in the Middle East and renewed instability in US politics have created a situation that one portfolio manager described as the most volatile since the 2008 financial crisis.
Markets are rapidly reassessing interest rate expectations, with cuts being lifted and hikes now entering forecasts.
There are also warnings that oil prices could rise even higher if supply disruptions extend, raising fears of renewed inflation and economic stress around the world.
The local background is showing signs of improvement
Despite global pressure, South Africa's internal picture has improved.
The formation of a national unity government has helped unlock reforms and boost investor confidence.
Energy supply has been stable for more than 300 days without load shedding.
Government debt is showing signs of stability, while inflation and interest rates remain relatively under control.
South Africa has also moved out of the FATF gray list, further improving its standing with global investors.
These factors have led to what has been described as a 'virtuous circle' supporting the local investment case.
Commodity boost hides big risks
Strong commodity prices have supported South Africa's market performance.
Gold stocks have driven a significant portion of the gains on the JSE, leading to increased tax revenues and a stronger rand.
However, analysts have warned that this has also increased instability.
The heavy weighting on resource stocks means the market is more sensitive to global price fluctuations, with recent sharp corrections already visible.
Is South Africa still cheap?
Despite recent gains, some parts of the market are still undervalued.
Banks are trading at relatively low multiples compared to global peers, reflecting the risk premium associated with South Africa's sovereign outlook.
Some investors argue that this discount may be excessive given the strength and flexibility of local financial institutions.
Retail stocks are also giving mixed signals.
Despite being sensitive to interest rates, some companies still viewed as high quality businesses trade below their long-term value.
Meanwhile, smaller companies are being overlooked, potentially misvaluing due to limited access to investors.
The credibility of the central bank has become important
In this environment the role of the South African Reserve Bank is becoming increasingly important.
A credible inflation target and a coherent policy stance are considered important for taming expectations and maintaining stability.
Economists say this credibility helps prevent runaway inflation and supports long-term growth, especially as global pressures rise.
Local optimism versus global caution
The contradiction is clear.
Globally, markets are volatile, uncertain and increasingly defensive.
Locally, there is cautious optimism driven by political stability, pace of reform and pockets of value.
Investors are not ignoring the risks.
South Africa is facing global shocks, particularly due to oil prices and capital flows.
But right now, some believe the best opportunities may still be closer to home.
For more, listen to Gary Booysen of Rand Swiss and Jaco-Chris Coorts of Sanlam Investments. The Money Show Using the audio player below: