10X Market Update: What the Latest Market Shifts Mean for Your Long-Term Returns

2025 was a year shaped by powerful global forces, shifting leadership in financial markets, and unexpectedly strong outcomes for South African assets. In this latest 10X Market Update, Chris Eddy, Head of Investments at 10X, reflects on the key developments that drove markets over the past year, how different asset classes and portfolios performed, and what investors should be thinking about as we move into 2026.

From a weaker US dollar and surging commodity prices to falling inflation and strong local returns, the past year challenged many long-held assumptions. Understanding these shifts is essential for setting realistic expectations and building resilient portfolios for the years ahead.

Key moments:

• 1:20 - 2025 recap, portfolio performance, and how 10X is positioned for 2026
• 2:32 - The big 2025 theme, a weaker US dollar and shifting global leadership
• 3:03 - Dollar in focus, DXY down ~11% over 2025
• 4:48 - Why strong US returns looked weaker in rands
• 6:43 - Commodities boost South Africa, strong precious metals and softer oil
• 9:00 - A standout year for the JSE, led by resources
• 11:24 - Inflation falls below target and bonds rally
• 15:47 - Regulation 28 portfolios, risk versus return over time
• 22:12 - The big 2026 question, cycle shift or temporary blip
• 38:01 - How 10X is positioned, defensives up, US equities down, diversification front and centre

Looking back at 2025: the forces that shaped markets

The dominant global theme of 2025 was a meaningful weakening of the US dollar. After years of strength, the dollar depreciated by around 11 percent, with much of the move occurring early in the year before continuing at a steadier pace.

For South African investors, this shift had important implications. While US equities delivered strong returns in dollar terms, those gains were significantly reduced once translated back into rands. At the same time, a weaker dollar created a more supportive environment for emerging markets, commodities, and developed markets outside the US.

Locally, South Africa benefited from a powerful combination of global factors rather than purely domestic ones. Commodity markets were a standout feature of the year, particularly precious metals. Gold and platinum prices surged, delivering a substantial inflow of hard currency into the local economy. At the same time, oil prices remained relatively subdued, lowering import costs and helping to contain inflation.

This improving terms-of-trade dynamic provided a strong underpin for the rand and created a favourable backdrop for South African financial assets.

The Rand Story: Why South African Assets Benefited

Against this global backdrop, South African markets delivered exceptional returns in 2025. Local equities were among the strongest performers globally in rand terms, driven largely by the resources sector.

The All Share Index posted robust gains, with mining and commodity-linked companies leading the charge. Financials and industrials also delivered solid returns, but it was resources that dominated performance as higher commodity prices flowed directly into earnings and dividends.

South African bonds also surprised many investors. Falling inflation and a shift in the inflation target allowed interest rates to move lower, driving strong capital gains in government bonds. Even traditionally defensive assets delivered returns that rivalled equities, highlighting just how supportive the environment was for local investors.

Inflation, interest rates, and bonds

One of the most important developments of the year was the sharp decline in South African inflation. Inflation fell below the lower end of the target range, creating room for a reset in monetary policy.

As inflation expectations eased, bond yields moved lower, generating strong returns for investors holding government and inflation-linked bonds. This reinforced an important point: periods of market stress and transition can create unexpected opportunities in defensive asset classes.

For investors, the combination of low inflation and attractive real yields has made bonds and cash far more compelling than they have been for much of the past decade.

How 10X portfolios performed

Across the 10X portfolio range, higher-growth portfolios delivered the strongest long-term outcomes, consistent with their design. Over extended periods, portfolios with greater exposure to growth assets have rewarded investors who were able to remain invested through periods of volatility.

At the same time, the past year demonstrated the value of diversification. Defensive portfolios benefited from strong bond returns, while offshore-heavy portfolios faced headwinds from a strengthening rand.

The key takeaway is not that one portfolio is “better” than another, but that outcomes depend on time horizon, risk tolerance, and the ability to stay invested through different market cycles.

Living Annuities and Offshore Exposure

For living annuity investors with greater offshore flexibility, international portfolios remained an important diversification tool.

While rand strength created short-term headwinds in 2025, global equity portfolios still delivered solid real returns. Over longer periods, offshore exposure has continued to play a valuable role in managing risk and capturing global growth.

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The big question for 2026: a turning point or a temporary pause?

As we look ahead, one question dominates investor conversations: are we witnessing the start of a longer-term shift away from US market dominance, or was 2025 simply a temporary deviation from a well-established trend?

History suggests that markets move in long cycles. Periods of US outperformance have been followed by extended phases where other regions lead. With US equities now representing a very large share of global indices and trading at elevated valuations, the potential for broader global leadership has become harder to ignore.

At the same time, the US dollar remains expensive by long-term standards, even after its recent weakness. If dollar softness persists, it could continue to favour emerging markets, commodities, and developed markets outside the US.

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Looking Ahead: Is the Market Cycle Turning?

The central question for 2026 is whether last year marked the start of a broader cycle shift.

History shows that markets move in long phases. Periods of US dominance have previously been followed by extended phases where other regions outperform. With US equities now trading at elevated valuations and representing a very large share of global indices, the risk of concentration has increased.

A weaker dollar environment would likely continue to support:

• Emerging markets
• Developed markets outside the US
• Commodity-linked economies such as South Africa

Portfolio Positioning: Preparing for a Range of Outcomes

Given this backdrop, the focus is not on predicting short-term market moves but on building portfolios that can perform across different scenarios.

Current positioning reflects:

• An overweight to defensive assets, where attractive real returns are available with lower risk
• A reduced exposure to US equities, particularly the S&P 500
• Greater diversification across emerging markets, China, and developed markets outside the US

The objective remains consistent: to compound real returns over time, whether investors are saving for retirement or drawing an income in retirement.

Wrapping Up

The past five years have delivered exceptional returns, but history reminds us that such periods do not last forever. As markets evolve, managing expectations, understanding portfolio risks, and staying disciplined become increasingly important.

In volatile environments, knee-jerk reactions often do more harm than good. For most investors, the best outcomes come from staying diversified, aligned with long-term goals, and focused on real returns rather than short-term noise.

2026 is likely to be another interesting year. With supportive global tailwinds still in place for South Africa, patience and perspective will be key.

*Disclaimer: This content is for informational purposes only and should not be construed as financial advice. Please consult a qualified financial advisor for guidance tailored to your individual circumstances.