The Trade war and Iran

We have not seen the South African equity markets pop as was expected after what seemed to be a successful election. The rand also has not strengthened much and in general we are treading water.

We can, however, blame the escalating trade war between the USA and China for this disappointing state of affairs after what seemed to be a done deal disintegrated into more tariffs being implemented by Trump.

Another cause for concern is the tension between the USA and Iran. There are constant rumours that the Trump administration wants to go to war with Iran – which will be bad news for shares, the oil price and the rand, as investors will run to safe havens like US bonds and even gold.

If we look at the positive side of things, the world markets are still up between 6,5% and 13% for the year to date and once the trade war has been resolved it will be positive for everyone. Good companies become stronger when times are tough and the weak ones disappear. As we have mentioned before, we do not believe that a buy-and-hold strategy works well in this new age of instant information and fake news, but we do believe that you have to give a company with potential the benefit of the doubt and enough time to prove itself.

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