Why it’s a good time for South African investors to address concentration risk
With the US dollar having pulled back from the highs seen in the second half of 2022, this is an opportune time for South African investors to address domestic concentration risk if they have been overly exposed to local assets, according to investment advisory and wealth management firm GraySwan.
Aggressive interest rate hikes by the Federal Reserve, and a decline in risk appetite, pushed the US Dollar Index to a 20-year high during October 2022. The rand, which tends to bear the brunt of market shocks and a strong Dollar, subsequently slid to lows of around R18.40/$.
More recently, however, data releases have stoked optimism that interest rate increases may soon be a thing of the past. Together with China’s reopening, this has reduced pessimism in global financial markets, and the rand...