2025 ended with a pair of financial narratives running in opposite directions: global and South African markets climbing steadily into one of the strongest multi-year rallies seen since the early 2000s, while Bitcoin; once again; reminded investors of its fragility with a sharp correction and a clouded forward outlook. In this episode of Making Sense, Francis Herd and Gareth Edwards guide listeners through why these stories diverged so dramatically, and what they reveal about the global economy heading into 2026.
On the equities side, the mood is upbeat. South Africa is experiencing something unusual: sustained outperformance against the S&P 500, one of the most widely tracked indices in the world. Local markets are benefiting from improved electricity supply, operational reforms, early signs of infrastructure stabilisation and a stronger-than-expected rebound in commodity participation. The removal of South Africa from the grey list strengthened sentiment further, encouraging international capital flows and reducing perceived risk. Francis highlights how these structural improvements; long in the making; have finally converged with a global risk-on wave, creating an environment in which emerging-market assets look increasingly attractive.
Globally, markets have been buoyed by cooling inflation, slowing but stable growth, more predictable policy signals from major central banks and renewed interest in diversified sectors beyond tech. Firms like Goldman Sachs, Morgan Stanley and Deutsche Bank have issued optimistic 2026 projections, with some calling this the healthiest market breadth since before the pandemic. However, Gareth notes that not everything is rosy. The extraordinary concentration of gains in AI-linked technology stocks is raising concerns about stretched valuations and whether investors have priced in unrealistic productivity expectations. Geopolitical tensions; from Red Sea disruptions to election-year uncertainty in major economies; remain wildcards that could shift sentiment quickly.
The crypto story, however, sits firmly on the other end of the spectrum. After a surge to record highs earlier in the year, Bitcoin has entered a deep correction, shedding confidence among both institutional and retail investors. Gareth explains the mechanics: speculative leverage unwound aggressively, regulatory oversight tightened in key markets, and investors turned toward safer yield-bearing assets as interest rates rose. The combination of high volatility, inconsistent liquidity and the absence of intrinsic economic anchors makes forecasting Bitcoin’s future extremely difficult. Even analysts who remain long-term crypto supporters concede that structural uncertainty persists.
This divergence between traditional markets and digital assets matters for South Africans. Stable, broad-based equity performance improves pension fund values, boosts savings outcomes and encourages long-term investment planning. Meanwhile, Bitcoin’s unpredictability reinforces the need for cautious allocation and clarity about personal risk tolerance. For those drawn to crypto as an inflation hedge
or diversification tool, the latest downturn is a reminder that short-term behaviour can undermine long-term narratives.
Ultimately, the episode argues that the financial landscape of 2025 underscores two truths: disciplined, fundamentals-based markets tend to stabilise and reward resilience, while speculative assets amplify both opportunity and risk. As South Africa steps into 2026 with renewed economic momentum and global markets find their rhythm, the challenge will be balancing optimism with realism; and ensuring that investment decisions reflect both sides of the story.
Catch up on all Making Sense episodes here: https://www.enca.com/making-sense-podcast