JSE bloodbath has a silver lining

While South African assets, bonds and the rand suffered in the month of March, their outperformance in 2025 meant they only returned to levels seen a few months ago.

In fact, these local assets are still stronger than they were in April 2025, following a sell-off triggered by US President Donald Trump’s ‘Liberation Day’ tariffs.

This was pointed out by Momentum Investments’ head of asset allocation, Herman van Papendorp, who said it is important for investors to keep perspective during such severe market downturns.

His comments come after March proved to be one of the worst months on record for the JSE, bringing the exchange’s streak as a top-performing global bourse to an abrupt end.

The JSE Capped All Share was down 10.5% in March, and only a one-day rally on the last day of the month saved the JSE from its worst monthly drawdown since the global financial crisis almost 20 years ago.

This March sell-off was enough to drag down the whole quarter, despite risk-on global sentiment prevailing in January and February, which had benefited South African and other emerging-market assets.

The March sell-off was triggered by the Iran war, which began on the last day of February, leading to heightened uncertainty and a clear risk-off approach among investors.

“The risk-off and rand weakness drivers of the March return trends also largely determined the outcome for the first quarter of 2026, with global assets outperforming South African assets in rand terms,” Van Papendorp said. 

This affected the rand and local bonds as well. He explained that, among South African asset classes, listed property was the worst performer year-to-date, followed by nominal bonds and inflation-linked bonds. 

In addition, with the United States dollar acting as a safe-haven asset since the war began, the rand weakened more than other emerging-market currencies.

The varying performances of different asset classes over the past month, followed by the first quarter of 2026, can be seen in the graphs below, courtesy of Van Papendorp.

The saving grace

Van Papendorp explained that, when financial markets experience such severe sell-offs as seen in March, it is important for investors to keep perspective. 

He pointed to two factors that put the March drawdown into perspective for local and global investors.

Firstly, he said it is important to remember that the March sell-offs were induced by a geopolitical oil shock. 

In the past, these types of events typically faded relatively quickly unless the oil price spike was sustained for so long and at such a high level that it caused a recession for the United States. 

“In our view, a US recession is still a low-probability scenario, as the US economy entered the Iran war with strong momentum,” he said.

In addition, the US economy is set to receive further support in 2026 from past interest rate cuts and fiscal stimulus, making a recession even more unlikely.

“As such, we currently expect markets to broadly follow the historical playbook and retrace to pre-shock levels in around six months, as shown in research by UBS,” Van Papendorp said.

Secondly, he explained that many of the asset classes that saw the biggest return declines in March had very strong performance momentum during 2025 and the first two months of 2026. 

Therefore, even with the severe sell-offs experienced in March, these assets are now only back at levels seen just a few months ago. They are also still sharply up from the ‘Liberation Day’ tariff-induced lows of April 2025.

Van Papendorp urged investors to keep a clear head and avoid big reactions to the latest market movements.

“Historical experience shows that reactive portfolio selling during periods of market stress erodes long-term value by locking in short-term losses ahead of the recoveries that markets typically deliver,” he said. 

“Inaction, in this instance, represents the optimal investment strategy.”