Since the global financial crisis, local investors have been spoilt with good market returns as excess liquidity was pumped into the system in the developed markets in an attempt to resuscitate their economies. South Africa, like other emerging markets, was a key beneficiary of this capital, which helped to push asset prices up.

The developed markets have started to increase interest rates, tapering on their asset purchase programs leading to outflows from the inflow reliant emerging markets. After almost a decade of very good returns in the local market without a significant drawdown (a decline of 20% or more), investors have been warned to expect lower returns going forward.

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When Times Are Tough Stay Invested by Tawanda Mushore