Trading update : 27 June 2025

As geopolitical tensions simmer in the Middle East, markets are marching to the beat of “keep calm and carry on”, taking cues from historical rebounds and strong economic data. Tesla’s robotaxis finally hit the road, giving its share price a self-driving jolt, while South Africans are doing their best to dodge potholes.

There are also more roadblocks ahead in the local automotive sector.

Keep calm, carry on

Years of buy-the-dip conditioning have trained investors to discount geopolitical shocks unless they hit large supply chains or trigger a fiscal or monetary response. With economic data holding up and no visible disruption to shipping routes yet from the US and Israel strikes on Iran, fears faded and investors assumed the more stoic keep calm and carry on mantra.

Unless investors fear the conflict will spread and engulf the entire region and dramatically reduce oil supplies, then rising geopolitical tensions won’t be a material negative on this market. 

Watch the bounce

According to the Morgan Stanley team, prior geopolitical risk events have led to some volatility for equities in the short term, but one, three and 12 months after the events, the S&P 500 (VOO-NASQ) has been up 2%, 3%, and 9%, on average, respectively.

Driverless debut

Tesla Inc. (TSLA-NASQ) made its long-awaited debut in the driverless taxi game, rolling out its service to a handful of riders in Austin, Texas. While a modest debut for what Elon Musk sees as a transformative new automotive business line, the stock soared over 9% on the news.

Disinflation disengaged

European Central Bank (ECB) Chief Economist Philip Lane said the process of bringing inflation back to 2% is almost over, despite some pockets of elevated price pressures remaining. Bloomberg quoted Lane as saying: “While headline inflation is currently around the target, services inflation still has some distance to travel. Still, there has been sufficient progress in returning inflation to target to consider that this monetary-policy challenge is largely completed.”

Doubling down

Prosus NV (PRX-JSE) aims to double its revenue over the next three years, targeting $12.5 billion in annual revenue by 2028. The company is focusing on building out large e-commerce platforms, using artificial intelligence to cut costs, and acquiring new businesses. CEO Fabricio Bloisi aims to double the company’s market value to $200 billion by mid-2028, which would make him eligible for a $100 million bonus.

SA’s infrastructure headache

South Africa’s poorly maintained infrastructure is driving up costs for local businesses and increasing insurance claims, according to the country’s biggest general insurer, Santam (SNT-JSE). The degradation of road, rail, power, and water infrastructure is causing losses and damage to vehicles, disrupting business operations, and affecting profit margins.

Smelter subsidies

The South African government will allow companies in the alloy and ferrochrome industries to negotiate electricity prices to promote beneficiation in those energy-intensive sectors and boost the economy.

Business Day reported that Electricity Minister Kgosientsho Ramokgopa said the government would start with the alloys industry because electricity accounted for more than 70% of its operational costs. The ferrochrome industry was also targeted because companies had been forced to close smelters because high power costs had rendered their finished products uncompetitive.

Sector focus: Automotive

The National Union of Metalworkers of South Africa (NUMSA) is demanding 10% raises for automotive sector workers ahead of talks that will agree on wages for the next three years. Averting a deadlock in pay talks and a potential strike by over 100,000 workers is seen as key for the survival of the industry.

Electricity supply constraints, logistics challenges and South Africa’s potential exclusion from the AGOA trade deal, which gives African nations preferential access to the world’s biggest economy, the US, are just a few of the numerous challenges facing the sector.