When global tensions flare, markets don’t ease into uncertainty, they lurch. February was a stark reminder of how quickly calm can fracture, and how fragile sentiment truly is. In moments like these, disciplined strategy and skilled managers matter more than ever.
Curate Investment’s CEO Ray Mhere and Head of Proposition Ali Simpkins discuss the current state of world affairs and its impact on clients.
Ali:
February started off on a strong note, especially for riskier assets like South African and broader emerging market equities. But that momentum faded quickly, didn’t it?
Ray:
Exactly. Towards the end of the month, markets were shaken by United States (US) and Israeli strikes on Iran, a sharp reminder of how quickly sentiment can shift.
Ali:
And that really changed the mood. One moment markets feel calm, and the next a geopolitical event reminds investors just how fragile that calm can be.
Ray:
Iran’s response only heightened uncertainty, those missile strikes targeting Israel and US-linked bases in the Gulf added another layer of risk for markets to digest.
Ali:
That’s usually when attention shifts to oil, right?
Ray:
Yes, a significant portion of the world’s oil and gas flows through the Strait of Hormuz. If there’s even a hint of disruption there, prices tend to move quickly and everything else follows.
Ali:
But we’ve seen this pattern before. These shocks can be quite sharp, but they’re often short-lived.
Ray:
That’s true. Markets recover faster than people expect, unless tension escalates into something bigger, like a US recession. For now, that still seems unlikely given the current economic backdrop. It also reinforces why diversification is so important, it helps smooth out portfolios when events like this happen.
Ali:
There are still a few ways this could play out though. In a more contained scenario, tensions stay elevated but don’t disrupt key supply routes. Oil prices rise temporarily, growth softens a bit, and inflation edges higher. In a more severe case, prolonged conflict or shipping disruptions could push oil prices much higher and put more pressure on both growth and inflation. And then there’s the possibility of internal instability in Iran, which could keep markets on edge even without immediate supply disruptions.
Ray:
And what impact could this have from a South African perspective?
Ali:
The main channels impacted tend to be oil, capital flows, and the rand. Higher oil prices push up import costs and inflation. That said, there’s some offset gold tends to do well during geopolitical stress, which can help support South Africa’s external position.
Ray:
So, what should advisers be saying to clients when nerves start to creep in?
Ali:
It comes back to staying disciplined. Investing is part science, part art. The science is the structure – asset allocation, diversification, and risk management. The art is judgment – knowing what really matters and what’s just noise. At Curate, we don’t try to do everything ourselves. Instead, we carefully select experienced investment managers to manage our funds on our behalf. Our role is to make sure they consistently apply both that science and the art of investing.
Ray:
Exactly. We spend a lot of time identifying and appointing managers with strong, proven track records – people who’ve successfully navigated different market cycles and shocks. They’re the ones making the day-to-day investment decisions, and they know what to focus on when markets get noisy.
Ali:
So when clients feel anxious, the message is really about trusting that process?
Ray:
That’s right. If a client’s goals haven’t changed, there’s usually no reason to change the strategy. Our role at Curate is to bring together a focused range of funds, managed by carefully selected experts, that work well individually and complement each other, thereby helping clients stay on track, even when markets feel uncertain.
By combining specialist managers with clearly defined roles, Curate’s approach supports resilient portfolio construction – not just when conditions are favourable, but when markets behave in unexpected ways.
