The Inside Track – August Insights

29 August 2025

Welcome to the Thirteenth Edition of The Inside Track!
A clear lens in a noisy world, helping you filter the headlines and hold your course.

The world didn’t end in August. Markets didn’t implode. Politicians carried on with their usual theatre. Yet equities pushed higher after hints of Fed rate cuts, while Europe’s economy showed surprising resilience.

Back home, the Rand meandered, bonds held steady, and the JSE edged along. The Proteas did the business, the Springboks rebounded against the Ozzies, and unfortunately our very own hard-hitting Dricus du Plessis lost his UFC title fight, describing it in his own words as feeling like being smothered by a wet blanket. He’ll be back !

At least Spring is almost here, a reminder that seasons turn, fortunes change, and nothing stays pinned down forever.

Market Indicators

Returns % (to 22 August 2025)

Market Pulse: A Quick Read on the Numbers Above

August added another positive month to the 2025 tally. Local property and equities posted strong gains, bonds held steady, and global markets continued to edge higher. With the Rand flat, offshore returns for South Africans were more muted than in July.

The bigger picture has not changed. Earnings, valuations and rate expectations remain the levers to watch. Short-term swings are inevitable, but the underlying trend is still constructive – for now.

September has a history of testing markets. Let’s see if the ‘September Effect’ makes an appearance or skips a year.

Global Market News

• VIX at 14.8:  known as Wall Street’s “fear gauge,” it tracks expected volatility in the S&P 500 over the next month. With a long-term average around 20, today’s level signals unusually calm markets.
• Powell’s Jackson Hole tone:  rate cut hopes for September remain high, keeping equities near record levels.
• ECB held rates at 2%: inflation steady at 2% across the eurozone
• Australia cut its key rate to 3.6% : the RBA signaled more cuts may be needed to meet economic targets.
• U.S. housing : The latest S&P CoreLogic Case-Shiller data showed home prices up 1.9% year-on-year. This is the first time in years that price gains have trailed broader inflation (2.7%).

South Africa

• Business Confidence Index rose to 116.7 in July: up from 113.2, supported by stronger sales, manufacturing and metals; uncertainty remains over U.S. tariffs.
• Novo Nordisk launched Wegovy in SA: first African market entry, competing with Eli Lilly’s Mounjaro.
• Auto industry under strain: 12 company closures and 4,000 job losses in two years; Toyota to launch three EVs by 2026.
• SARB forecast: average inflation projected at 3.3% for 2025–26
• Rail reform approved: 11 private operators to join Transnet’s network from 2026/27, adding 20m tons of freight annually.

Mistakes That Quietly Undermine Wealth

The “bonus” that can make you poorer

Many people treat their RA rebate from SARS like a bonus to spend. Do this at your own peril.

Here’s why: retirement withdrawals are taxed as income. The rebate you get today is meant to grow and compound so that, by the time you’re drawing, it helps offset those future taxes. If you spend it now, you’ve weakened the compounding that was meant to protect you later.

In other words, you are cashing in today at the direct expense of your future self.

The smarter move is to reinvest the rebate into a discretionary, liquid “side pocket” investment. This does not mean paying upfront fees or commissions for another policy. It should simply run alongside your existing plan, keeping the rebate invested and flexible.

Every rebate spent on lifestyle today is retirement income lost tomorrow.

Food for Thought

What could a 3 percent inflation target mean for people on the ground in South Africa?

The Reserve Bank is debating whether to cut South Africa’s inflation band from 3–6 percent to a tougher 3 percent. Lower inflation could bring more stable prices and cheaper borrowing, although it may also slow growth in the short term and face political resistance.

• Money Market
  7–8% (before tax) today could ease to 4–5%. Less interest earned, but your cash could hold more of its buying power.
• Home Loan (20 yr)
  A R1m bond at 11% is about R10 322 per month.
  At 8% it is roughly R8 364.
  A saving of R1 957 each month.
• Government Debt
  With around R5.7 trillion owed, a 1% drop in borrowing costs may save about R57 billion a year, easing pressure on taxes and public finances.

Bottom line: Lower inflation targets could reduce savings rates but also ease debt costs for households and government. The impact will depend on how well the transition is managed.

Quote for the Month

“You gotta know when to hold ’em, know when to fold ’em, know when to walk away, know when to run.”

Kenny Rogers

Visual Insight of the Month

The table above shows that while U.S. giants dominate the headlines, some of the world’s biggest players are outside America. From Saudi Aramco’s $1.6T market cap to Europe’s luxury houses and Asia’s banking leaders, it shows the world’s wealth has many addresses.

Perspective for the Long Run

The Rand and the Long-Term Game

In the short term the Rand can be surprisingly resilient.

Over decades the erosion is clear.

Since 1997 it has weakened 414% against the US Dollar and 317% against the Pound. You see that loss of purchasing power in many of the imports we depend on, including fuel, medical equipment and technology

According to the South Africa Wealth Report 2024, surprisingly less than 20% of South African wealth sits offshore. The rest is tied up locally:

• Businesses and property, which are Rand-based.
• Large discretionary balances in banks and money market funds. Fine for short-term income, but as a long-term plan they leave wealth concentrated in one currency, one economy and and are not feasible for wealth building

This isn’t about predicting the next Rand move. It is about recognising that balance protects long-term value when so much else is already tied to the local economy.

The Rand will always move.

The real game is the long one: keeping your financial freedom on track, wherever the currency goes.

I hope this month’s mailer gave you something valuable to think about. Looking forward to catching up again at the end of September.

Until then, and as always, I’m just a click away if you’d like  insight, guidance or assistance.

Take care, stay mindful, and enjoy the moments that matter.