Monthly Market | February 2026
- Mar 5
- 12 min read
International
The United States and Israel carried out major military strikes on Iran, reportedly killing Supreme Leader Ayatollah Ali Khamenei and targeting Iranian military infrastructure, igniting widespread panic across cities like Tehran and Tabriz. Iran retaliated with missile and drone attacks on U.S. and Israeli forces, leading to American and Iranian casualties and heightened regional tensions. World leaders warned the escalation could widen into a broader Middle East war, threatening global security and economic stability. Iran has also launched retaliatory missile barrages at US bases across neighbouring countries, including the UAE, Bahrain, Kuwait, Qatar, Saudi Arabia, Jordan, Iraq and Syria.
Washington suggests ambitions that extend beyond nuclear deterrence towards pressure for regime change. Regime change rarely occurs without boots on the ground, and there is little evidence that the US has either the appetite or the political mandate for a prolonged ground war. Domestic political constraints, sensitivity to oil prices and the need for congressional approval all argue against it.
China and Russia have, thus far, remained on the sidelines. If this holds, the fighting is likely to remain confined to the Middle East and to conclude relatively quickly. Direct involvement by either power, while unlikely, would materially raise the risk of a wider confrontation.
While we expect the current situation to last longer than last year’s 12-day war, the most probable outcome remains a contained conflict followed by a negotiated ceasefire rather than outright escalation.
The rise in tensions had a direct impact on the price of oil, which edged higher as tensions rose. A sustained oil price of above $75 might impact on world inflation and a swing away from a declining interest rate cycle. In turn, this may lead to pressures on emerging markets and resources. Markets are particularly focused on the Strait of Hormuz, a vital chokepoint that handles roughly one-fifth of global oil shipments and significant volumes of natural gas. Tehran insists the strait remains open, but shipping companies quickly began rerouting vessels away from the narrow waterway. Meanwhile, OPEC+ agreed on Sunday 1 March to increase production by 206,000 bpd in April, ending a three-month pause. However, should trade through the strait get seriously choked, the extra production would not be enough.
Brent Crude Oil (USD)
Global markets saw a reassessment of risk, with technology stocks and cryptocurrencies under pressure, driving higher volatility and prompting investors to scale back exposure to higher-risk assets. Bitcoin fell below $70,000 amid broad crypto weakness, declining roughly 45% from its October peak as risk appetite faded.
Despite these uncertainties it is imperative that investors do not panic and stick to their long-term strategies. Knee-jerk reactions often lead to tears as geo-political actions and reactions are mostly unpredictable and should not be the basis of portfolio construction.
A strong cyclical change from US equities to emerging markets equities has started and is expected to continue for the rest of this year. Many fund managers are slowly rotating exposure from developed markets to emerging markets. The following table highlights the reasons behind this move.
Japanese Prime Minister Sanae Takaichi achieved a landslide victory for the Liberal Democratic Party, securing more than two-thirds of the seats in parliament’s lower house. She has pledged to revitalise the economy, which includes suspending Japan’s 8% sales tax on food.
French President Emmanuel Macron is urging EU leaders to stand firm in the face of continued US hostility, calling the “Greenland moment” a wake-up call to push through long‑delayed reforms to strengthen the bloc’s global power. Various European countries are shifting budget to defence as the threat of the US not operating in line with NATO, increases.
More than a dozen tankers loaded with Russian Urals oil are sailing toward Asia or idling along the route, a sign of producers racing to get cargoes closer to China as India pulls back from the trade. These vessels, carrying a combined 10 million to 12 million barrels of oil, are spread across the Indian Ocean, and off the coasts of Malaysia, China and Russia. Unless China takes up the slack, the lower volumes might put more pressure on the Russian economy, a direction welcomed by Ukraine.
The ECB announced on 5 February 2026 that it would keep its benchmark rates unchanged at 2% following its Governing Council meeting. European growth remained subdued, with the UK expanding 0.1% and the Eurozone 0.3% in the fourth quarter, strengthening the case for ECB easing later this year. The Eurozone posted a €12.6bn trade surplus, highlighting continued external resilience despite soft domestic momentum.
US inflation surprised to the downside, with CPI at 2.4%, the lowest level since mid-2025, reinforcing expectations of Fed rate cuts later this year. Most of the developed world is still in a declining interest rate cycle, but the Reserve Bank of Australia raised its cash rate by 25 bps to 3.85% to counter persistent inflation, marking the first-rate increase of 2026 and highlighting upside inflation pressure in Australia.
The U.S. Supreme Court ruled 6-3 that President Trump’s broad tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were illegal, finding he lacked constitutional authority to impose them without clear Congressional authorization. The decision voids those tariffs, stops their collection and could open the door for refund claims on billions of dollars paid. The U.S. has implemented a temporary global import tariff — initially 10% and announced to rise to 15% on most imports under Section 122 of the Trade Act of 1974. This can only remain in place for 150 days unless extended by Congress.
South Africa
John Steenhuisen, who has led South Africa’s second-largest political party since 2019, has stepped aside and will not contest another term at the Democratic Alliance’s upcoming elective conference in April. Steenhuisen said he will now focus fully on his responsibilities as Minister of Agriculture, and responding to the FMD disease outbreak. He announced that the first batch of one million high-potency vaccine doses from the Argentine biotechnology company Biogénesis Bagó arrived in South Africa. He said the shipment would mark the first phase of a broader agreement, and by the end of March, a total of over five million vaccines will have been delivered to the country from three international suppliers. Inoculation programmes have started in earnest with the help of private vets.
The official unemployment rate decreased by 0.5% to 31.4% in the last quarter of 2025, the lowest number since the third quarter of 2020, and the third straight quarter of net job growth with job gains in construction and finance.
US President Donald Trump has reauthorised the African Growth and Opportunity Act for a year, after it had been given Senate approval following extensive deliberations by lawmakers in the United States. South Africa is still part of the programme which was established in 2000 and exempts eligible African countries from taxes on their exports to the US. However, the punitive 30% “Liberation Day” duties which Trump slapped on South Africa last year, and the 25% he applied to vehicle imports, greatly override AGOA benefits. The US supreme court’s decision brought some relief, but key SA sectors, like automotives, continue to face high duties under existing U.S. trade laws (Section 232, etc.), and further tariff increases could return later this year if bilateral issues aren’t resolved.
President Cyril Ramaphosa’s 2026 SONA was growth-oriented, aiming to lift growth above 3%, with substantial focus on infrastructure investment, energy reform, security improvements, and industry support aimed at boosting investor confidence and economic competitiveness. He formally declared the foot-and-mouth disease outbreak a national disaster, and announced the deployment of the South African National Defence Force to key economic centres in Gauteng and Western Cape to fight illegal mining and gang violence. The President highlighted the water crisis, alongside crime, as one of South Africa’s top national concerns, and said a National Water Crisis Committee, which he will personally chair, will coordinate the response.
The genius of the 2026 Sona is that it gives almost everyone something small to applaud, while committing the government to almost nothing that would alienate its coalition partners. Land reform continues, but through restitution, not expropriation. State ownership continues, but with private participation. BEE continues, but with a review that might, eventually, produce something more efficient.
GDP growth is expected to be positive for the next two years (albeit lower than the President’s target), with various institutions projecting an even better 2027 for South Africa.
A broad institutional view that growth is expected to improve off a low base
Budget
The budget speech was well-balanced with some tax relief and an inflation adjustment to tax brackets. The following are some of the highlights which were well-received by most parties. It sounded more like a GNU budget than an ANC budget. The strong run in resources and commodities offered the Minister of Finance some leeway.
The Personal Income Tax bracket and rebate have been adjusted to compensate individuals for the effect of inflation,
The Tax-Free Saving Account contributions limit has been increased to R46 000 per annum,
The section 11F deduction for retirement fund contribution is now limited to the lower of R430 000 or 27.5% of taxable income, before the inclusion of a taxable capital gain,
The annual exclusion of capital gains or losses has been increased to R50 000 (and R440 000 on death), and
The compulsory VAT registration threshold has been increased to R2.3 million.
The annual offshore allowance was increased to R2m.
The focus of the spending is business- friendly with a strong focus on infrastructure and economic development.
The budget supports economic growth, job creation and social development
Finance Minister Enoch Godongwana’s Budget on Wednesday, 25 February 2026, has been cheered by the markets and paves the way for potential upgrades from ratings agencies over the next couple of years as South Africa begins the arduous climb back to coveted investment-grade status.
Sovereign ratings are likely to have bottomed for SA as fiscal and structural reform progress persist
Consumer spending in retail and tourism data showed that households remain cautious, with non-essential spending still under pressure due to high interest rates. Indicators from transport and construction suggest the economy is weak but steady, with little sign of either a strong rebound or a sharp slowdown. Inflation is expected to gradually ease lower for the next year, well within the 1% error allowance from the 3% target.
South Africa Inflation Rate | One Year Forecast
South Africa’s Trade Minister Parks Tau signed a framework economic partnership agreement with China, paving the way for negotiations on an early trade deal that could grant duty-free access for South African exports to the Chinese market by March 2026. The move comes as South Africa seeks to diversify export markets following the imposition of a 30% US tariff on South African exports, the highest in sub-Saharan Africa.
Infrastructure commitments remain significant, with government plans indicating approximately R940bn in spending over three years, including R156bn allocated to water and sanitation projects. This is intended to be the main driving force behind President Ramaphosa’s targeted 3% GDP. Should this focus, together with project Vulindlela, bear fruit, one should see the ratings agencies picking up the risk rating of South Africa.
Snippets from the market
Renowned scenario planner Clem Sunter (81) died peacefully at home in Somerset West.
ActionSA leader and former Joburg mayor Herman Mashaba has officially entered the race to become ActionSA’s mayoral candidate in the City of Johannesburg ahead of the upcoming local government elections. The main race for Johannesburg’s mayor is now between him and the DA candidate, Helen Zille. For the first time since 1994, the ANC is out of the leader board as it has not yet named a candidate.
On 30 January 2026, the Department of Agriculture published its Broad-Based Black Economic Empowerment requirements for exports to the European Union. The Democratic Alliance described the requirement as “job-killing race quotas” that would further damage the South African economy.
At the Madlanga Commission, General Shadrack Sibiya struggled to maintain his defence against serious allegations of corruption and political meddling in the police service.
Africa's biggest economies, Nigeria and South Africa, are driving the strongest growth in demand for stablecoins and are the most optimistic about their potential.
V&A Holdings, the company that controls the V&A Waterfront in Cape Town, has applied for approval to reclaim land the size of four rugby fields from the sea at Granger Bay. This will lay the groundwork for its R24 billion expansion plan.
Eskom’s power stations have started off 2026 on a good footing. The percentage of the energy availability factor (EAF) – is the highest it has been in six years. For the first five weeks of this year the EAF has averaged 72%. During the same period last year, it was 56%.
African Rainbow Minerals founder Patrice Motsepe has stepped down as executive chairperson of the mining group and has retired as an employee. Does this free him up to run as president of South Africa? Rumours of the PM27 campaign has already surfaced.
South Africa’s digital infrastructure push is accelerating. President Cyril Ramaphosa confirmed 55 data centres are operational, with over R50 billion in further investment expected over three years – reinforcing the country’s position as Africa’s largest data centre market.
The SA Reserve Bank has outlined its proposal to scrap the prime lending rate as a reference for pricing home loans and other credit in South Africa.
Former president Jacob Zuma has incurred another legal setback. The court has dismissed an application for leave to appeal by Zuma and Thales.
The national minimum wage will rise above R30 per hour for the first time when it changes to R30.23 on 1 March.
Trade Minister Parks Tau visited Beijng to sign the China–Africa Economic Partnership Agreement, which will see South African exports gain duty-free access to the Chinese market.
Sentiment among South African manufacturers climbed to a three-month high in January, driven by improving local demand.
Fruit exports to the tune of R1 billion are currently at risk due to the build-up of containers at the back-of-port facilities at the Port of Cape Town.
Total new-vehicle sales in January, at 50 073 units, increased by 3 479 units, or 7.5%, compared with January last year.
Rio Tinto has abandoned merger talks with rival commodities giant Glencore that would have created the world’s biggest mining company after the companies could not agree on a price.
A new study by research house Trade Intelligence shows that 39% of online punters are gambling more than they did a year ago, and that gamblers are sacrificing other spending priorities, particularly groceries.
Eskom has reversed an earlier claim that it would fine customers who failed to register their solar installations with the utility once its fee exemption period ends on 31 March. Eskom now says that it has no plans to fine people for not registering their solar systems.
In 2025 alone, more than 6 million solar panels were imported into South Africa from China. Analysts say the focus is now more on keeping the cost of electricity down than simply keeping the lights on.
The President’s business-friendly Sona confirms the end of Eskom’s monopoly and promises logistics reform and tariff protection.
An injection – called lenacapavir (LEN) – which gives women almost foolproof protection against getting HIV through sex, will be available to over 450 000 HIV-negative people across South Africa from 1 April.
The government has declared the drought in the Western Cape, Eastern Cape and Northern Cape as a national disaster, putting businesses and households on notice to use water sparingly.
Luno, Sanlam Specialised Asset Management, EasyEquities, and Lesaka have announced the launch of ZAR Universal (ZARU), a new Rand-backed stablecoin, which aims to ease on line transactions.
The City of Cape Town metropolitan municipality plans to introduce a bylaw that would more than double municipal rates on short-term rental properties, including Airbnb listings, by applying commercial tariffs like hotels, resulting in rate increases of up to 135%.
Gauteng's water crisis is deepening as Rand Water reduces water supply in high-consumption municipalities, including Johannesburg and Tshwane.
South Africa’s largest domestic airline, FlySafair, has announced the completion of a deal to sell the local business to infrastructure investment firm Harith General Partners.
Industry leaders at this week’s Investing in African Mining Indaba 2026 in Cape Town warned that the potential boost for the local economy from rising commodity prices is at risk of being squandered unless key obstacles are resolved. Top of the list is the draft amendment to the Mineral Resources and Petroleum Development Act, followed closely by electricity costs and the urgent rollout of a digital mining rights system.
South Africa’s agricultural exports shot up by more than 10% to a new record high of $15.1 billion in 2025 – despite the US suspending tariff-free access for most products.
Local production of inoculation doses to fight the country's worst outbreak of foot-and-mouth disease in many years, are available. Developed by the government's Agricultural Research Council, the local vaccine will be part of South Africa's bid to vaccinate 80% of its national herd of about 12 million cattle. The ARC will supply 20 000 vaccine doses per week from March 2026, raising its output to 200 000 doses per week from 2027.
The National Energy Regulator of SA has officially hiked electricity price increases to 8.8% for the next two years, reflecting the correction of its R54 billion mistake in Eskom’s price application made last year.
The City of Cape Town will call for tenders for several major projects aimed at cutting electricity costs and bolstering water security in South Africa’s second largest city.
Rhino killings went down countrywide during 2025, but killings in Kruger National Park have doubled compared with the previous year. The dramatic surge in rhino poaching in Kruger was mirrored by an equally significant drop in killing rates in the Hluhluwe-iMfolozi Park in KwaZulu-Natal, which is attributed to a mass dehorning operation which began in April 2024.
The Department of Health says the Nipah virus poses no immediate risk to South Africa and is unlikely to spark a pandemic. The WHO has assessed the global public health risk as low after two confirmed Nipah cases in India.
Denmark is supplying four F-35 fighter jets to Nato’s new “Arctic Sentry” mission, which is meant to promote the alliance’s presence in the arctic. This comes as an effort to diffuse tensions sparked by Trump’s notion to acquire Greenland.
Geordin Hill-Lewis has thrown his hat into the ring for the top job at the Democratic Alliance.
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