The 2025 Nedgroup Investments Summit emphasises diversification and long-term thinking as the global economy faces unprecedented uncertainty

Nedgroup Investments hosted the annual investment summit from 27 – 29 January 2025 in Cape Town, Johannesburg, Pretoria and Durban respectively.

With the global economy facing unprecedented uncertainty, the Nedgroup Investments Summit brought together Nedbank Group’s Chief Economist, Nicky Weimar, and five Best of Breed^™ portfolio managers, Lara Dalmeyer and Omri Thomas from Abax Investments, Nick Balkin from Foord Asset Management, Saul Miller from Truffle Asset Management and Murray Winckler from Laurium Capital.

The speakers’ presentations painted a detailed picture of the challenges and opportunities they are seeing in the global market, addressed the big themes, questions and driving forces behind financial markets in 2025, while emphasising the importance of resilience, diversification and long-term thinking.

Nicky Weimar, Chief Economist at Nedbank Group, provided a macroeconomic overview, with an in-depth analysis on global and South African markets, including the economic challenges posed by high interest rates and an unprecedented level of global debt. The big question now is how sustainable this is, as central banks are walking a tightrope trying to control inflation without stifling growth.

Weimar also spoke about the uneven impact of high interest rates on different segments of the economy. While many homeowners in the US locked in low mortgage rates during the pandemic, those entering the market now are facing significantly higher borrowing costs and this divide is slowing housing transactions and impacting broader economic activity.

Locally, Weimar explained that South Africa continues to face structural reform challenges and the improvement of these is integral to economic growth and to ensure that the country is competitive on an international scale. While there has been significant improvement in Eskom’s performance, there is still slow momentum in the logistics, rail and minerals sectors.

Echoing Weimar’s analysis, Lara Dalmeyer, Portfolio Manager of the Nedgroup Investments Flexible Income Fund, discussed global fixed income markets and the drivers of inflation, as well as the cautious approach of the Fed regarding further interest rate cuts and the challenges posed by high inflation. Dalmeyer noted that we are in unknown territory when it comes to fighting inflation, and the effectiveness of monetary policy remains uncertain.

Dalmeyer also highlighted the importance of resilience and diversification to mitigate risk during periods of ongoing uncertainty, and noted that diversification is not just about spreading investments across asset classes, it’s about understanding how they interact under different conditions, a philosophy they use to create portfolios that can withstand market shocks. She also explained the key role of adaptability in the current global economic environment and that investors need to be prepared for a delicate balancing act between inflation, growth, and central bank policy.

Nick Balkin, Portfolio Manager of the Nedgroup Investments Stable Fund, spotlighted investment trends in 2025, while addressing significant macroeconomic questions, including US exceptionalism, rising interest rates, and government debt sustainability. The US has over 100% debt-to-GDP, which Balkin noted as a phenomenal number that is more reflective of an emerging market rather than a developed one. The US economy’s resilience, despite substantial interest rate hikes, raises questions about the lagging impact on the broader economy.

Balkin’s presentation also touched on the transformative potential of Artificial Intelligence (AI). While experts cannot yet predict its full impact, it is clear that AI will drive significant productivity gains, particularly by automating simple, replicable tasks. However, its long-term effect on inflation and employment remains a key question.

Balkin also reflected on historical market trends and drew parallels to the current environment, while reminding investors to remain cautious and avoid overconfidence. The S&P’s recent performance is remarkable, but history has shown that such momentum often leads to negative outcomes in subsequent years.

Murray Winckler, Portfolio Manager of the Nedgroup Investments SA Equity Fund, presented on South Africa’s unique mix of challenges and opportunities, and the steps required to make the country a compelling investment and why he believes fixed investment is the answer. Winckler believes that South Africa should focus on fixed investment spending because without it, the country may not see structural improvements in the economy. Fixed investment spend currently sits at 15% of SA’s GDP, which is roughly R1 trillion. Historically, this number reached 22% in 2008.

According to Winckler, if South Africa can grow fixed investment by 5-10% annually over the next five years, this may push GDP growth to around 2-3% annually. However, achieving sustained growth of 5% will require significant public-private partnerships and a reliable policy environment.

Speaking about the challenges and opportunities for SA, Winckler highlighted cyclical recovery, business confidence and infrastructure development as opportunities for growth. Cyclical recovery is underway, with inflation under control and interest rate cuts likely to support growth. Despite pressures on consumers, lower inflation and stable transport costs are creating some breathing room, and for growth to accelerate, business confidence must improve. The private sector, which accounts for two-thirds of fixed investment, needs a stable and predictable policy environment to unlock further investment, and key investments in water, electricity, ports, and rail are critical. Murray explained that the government must facilitate these projects while encouraging private sector participation, as this could amount to over R100 billion in contributions.

On the global stage, Winckler acknowledged risks and opportunities, particularly from the US and China. Valuations in the US are high, and while growth remains strong, long-term returns may be lower. China's response to global challenges, including potential macroeconomic stimulus, will also be crucial for South Africa, given the country’s reliance on resource exports.

Clients who attended the Nedgroup Investments Summit also heard from Omri Thomas, Portfolio Manager of the Nedgroup Investments Opportunity Fund, who explored the relationship between renewed political and economic confidence and tangible economic development, while analysing key sectors and employment trends, and Saul Miller, Portfolio Manager of the Nedgroup Investments Balanced Fund, who discussed strategies to navigate economic uncertainties by leveraging diversified portfolios.

The Nedgroup Investments Summit presented an opportunity for investors, industry leaders, and stakeholders to gain insights into the critical themes driving financial markets in 2025. The annual investment summit is in line with Nedgroup Investments’ commitment to empower informed investment decisions through thought leadership, and investment and economic market analysis.