Justicia Shipena
The head of investment at Simonis Storm Securities, Max Rix, says the investment landscape has changed.
According to Rix, the change is not a temporary adjustment but a structural regime shift. Interest rates will remain real.
Rix said interest rates will remain real, capital will remain costly, and fiscal policy will stay constrained.
“We see no room for complacency and even less for nostalgia,” he said.
“The old anchors, free liquidity, suppressed volatility, and endless duration – are gone. What remains is the real task of investing: allocating capital prudently, understanding risk honestly, and protecting long-term value against systemic erosion.”
He noted that inflation will stay lower than in recent years but won’t return to the predictability of the 2010s.
In Namibia, he described the macroeconomic environment as defensive, with signs of stabilisation.
However, fiscal consolidation continues to limit public investment and private credit growth.
According to Rix, business confidence remains weak, and structural barriers to domestic capital formation persist.
Private investment is expected to recover slowly. Still, he said the banking sector remains strong.
The report highlights FNB Namibia and Standard Bank Namibia for their solid capital levels, sound risk management, and reliable dividends.
These banks are considered well-positioned to protect capital and deliver returns in a low-growth, high-carry environment.
On fixed income, the report is cautious about long-duration sovereign debt. It sees better value in the 3–5 year segment of the yield curve.
“Real yields are attractive, and the steep yield curve allows investors to secure income without taking on too much risk,” Rix said.
With the policy rate near its cyclical floor and no tightening expected soon, this part of the curve offers a balance between income, price sensitivity, and liquidity.
In South Africa, the outlook is supported by an improving inflation profile, a resilient external sector, and undervalued currency dynamics.
Headline inflation is below 3%, and it is expected to average 3.5% in 2025. This gives the South African Reserve Bank more room to move.
The inflation anchor’s credibility and the rand’s undervaluation of 7–10% on a real effective exchange rate basis support policy stability and potential rate cuts in the second half of 2025.
South Africa’s bond market is recovering from the political risks that occurred earlier this year.
The 10-year government bond yield is around 10.6%, with a risk premium of 3.6% over US Treasuries.
If GDP growth reaches 1.4% in 2026 and the SARB cuts rates by 25 basis points, yields could drop to 9.9%.
With stronger fiscal consolidation, there is room for yields to fall to 9.4%.
The front-to-intermediate curve remains attractive, especially for investors able to hedge political risk.
The report maintains an overweight position in South African financial stocks, especially Standard Bank and FirstRand.
These banks show strong return on equity, good liquidity, and resistance to margin pressure.
They also stand to gain from a stronger rand and global underweight positions in South African banking stocks.
In commodities, producers of platinum group metals are seen as undervalued.
The report prefers companies with low capital spending, strong cash flow, and limited political risk.
Across Namibia and South Africa, the report focuses on capital preservation.
It avoids assets with low liquidity and favours those offering real, visible returns.
“This is our strategic framework for the second half of 2025. It is grounded in realism, informed by discipline, and committed to capital preservation.”
“The era of free capital is over. The architecture of serious investing begins now,” the report concludes.
