Investors face turbulent times as Trump's tariffs cause significant market fluctuations. Experts weigh in on potential strategies and the long-term implications for global investments.
Image: Peter Zay / AFP
It’s been a rough few weeks for investors across the globe with volatility caused by higher-than-expected tariffs announced by United States President Donald Trump on April 2, which he called Liberation Day, before walking them backwards somewhat.
Markets have seesawed, losing serious ground before recovering and then being highly volatile. And this is going to be the picture for the while, market commentators and analysts say.
Old Mutual Wealth chief investment strategist, Izak Odendaal, compared Trump’s trade war to the adverse impact of heavy rain, with the full effect of water damage only being felt later in time. He wrote that the world’s financial markets took the first blow, yet “all that water still needs to go somewhere, and swollen rivers can wreak havoc days away from where the deluge was”.
It is possible that markets could shift up or down around 10% over the next few weeks, said Peter Armitage, Anchor Capital’s CEO & co-chief investment officer. “We typically get a 10% move-in market most years. It’s very difficult to forecast what happens next; there does appear to be some more sanity coming into the system,” he said.
The wild market swings have left investors dazed and confused, said Odendaal.
Armitage said that there are massive changes in markets daily after Trump “shocked and surprised everybody”. “We live in some interesting times.”
Chris Eddie, lead fund manager for 10X's multi-asset fund range, noted that everyone is exhausted “by the extent to which the tariff goalposts are being changed”.
Over the period between April 3 and April 4, the S&P 500 collectively lost 10.5% of its value, with US markets having their worst losses since the pandemic. The S&P 500 has moved down 9% so far this year, yet is up some 7% on the same time in 2024.
10X chief investment officer, Anton Eser, said that, for South African investors, United States equities are now a huge portion of any retirement fund. “Most importantly, and as we've seen at the moment, what's going on has significant repercussions for all financial markets, including our local market,” he said.
Anchor Capital’s research showed that year-to-date, South African equities had gained about 2.1%. Emerging markets were down 2.1% in the same period, Anchor’s research showed. Over a year, South African shares were up 17.3% compared to 2.8% for the overall emerging market class, its data indicated.
It is, however, said Armitage early days, and it will take weeks if not months for the market to “bottom out” given that Trump has caused a “growth scare”. He also noted that markets move over time, and the best period to invest would be after a decline. “Some shares are 30% down.”
“Economic activity, the decisions of companies and consumers, sit downstream of Trump’s tariff announcements, and it will take time to see how much destruction the floodwaters cause,” said Odendaal.
In his note, Odendaal put forward two potential decisions investors may make on the back of the market swings: Sell equities and bonds while hiding in cash, or hang on. Selling, he said, could prove to have been the right option in hindsight. However, the contrary situation is if tariffs are removed tomorrow, in which case “markets will rocket higher”.
Armitage said Anchor Capital was “not panicking. We haven’t felt compelled to do a wholesale sale of shares. The actual share moves in aggregate are not as dramatic as it feels, and that’s because the day-to-day moves are so big. The market is just trying to find its space… This will be an event that too has passed.”
Whether tariffs are removed “probably depends on psychology more than economics,” said Odendaal. “The dilemma is that no one knows, perhaps not even Trump himself. This does not appear to be a good time for making big tactical bets on a very uncertain future outcome,” he noted.
Company valuations in the US are likely to come down, said Armitage, as US inflation will increase because of the higher prices due to increased expenses of imports. “Selling and crystalising losses is the wrong thing to do,” he said.
Armitage also pointed out that the United States market had started the year expensively, which meant there was not much room for error.
Eddie said that in the United States, the entrance of the ChatGPT alternative in January of China’s DeepSeek really marked the top of the market for the so-called Magnificent Seven.
Magnificent Seven:
There are still opportunities in the markets even as some companies will be worth less because their futures will have been changed by the inevitability of tariffs in one form or another, having arrived to stay, said Armitage.
Eddie said, looking beyond the United States, South African, and emerging market equities, “have all shown much more resilient performance during this period of market stress, obviously starting from much lower valuations and potentially less impacted by some of the market volatility that we've seen”.
Odendaal said that investors should ask themselves the same question that they would have “before all this drama started”. Do I have a portfolio whose targeted asset allocation balances my expectations for return and tolerance for risk?
As Odendaal noted: “One man, Donald Trump, caused this, and he is the one man who can unwind some of the damage.”
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