By Wendy Myers, Head of Securities at PSG Wealth

As we settle into the second half of 2026, global market returns continue to be driven by themes pulling markets in different directions. There has been an almost unprecedented combination of geopolitical tension, volatile oil prices, persistent inflation, and uncertainty over interest rates. Added to this are the extraordinary gains delivered by artificial intelligence (AI), which have become concentrated in a small number of large companies.

Against this backdrop, it is increasingly apparent that uncertainty is now a permanent condition. Local investors should stop treating volatility as a temporary disruption and, rather than seeking certainty, should construct portfolios capable of withstanding a range of market outcomes.

Geopolitics is hitting home

Geopolitical outcomes are becoming harder to predict, but their consequences for South Africa are not remote. As a net importer of oil, the country is vulnerable to sustained increases in global energy prices, impacting transport and production costs, consumer spending, the rand, and increased inflation risk. These effects have direct implications for several JSE sectors, both positive and negative.

Investors should therefore avoid reacting to short-term news. The more useful question is how a geopolitical development changes the earnings outlook for the companies they own.

AI remains important, but price is pivotal

AI is one of the defining investment themes of our time. With infrastructure investment in semiconductors, cloud platforms, data centres and energy supply expected to account for more than half the growth of 2026, it remains a strong structural opportunity for long-term investors.

However, investors should distinguish between the long-term opportunity presented by AI and the price paid for individual shares. Strong rallies in US technology and AI-related companies have resulted in elevated valuations and increased market concentration. Investors entering only after significant price appreciation risk buying into excessive optimism and exposing themselves to sharp corrections.

Rather than seeking blanket exposure, investors should focus on companies with sustainable earnings, strong balance sheets and a credible route from AI investment to profitability.

Chasing returns is chasing your tail

Investors often react to volatility by selling assets after they have fallen or buying sectors after they have rallied. This can result in repeatedly purchasing at high prices and abandoning investments at the wrong time.

The recent excitement around SpaceX is a case in point. Investors should be wary of extrapolating the resilience of US technology stocks indefinitely. The speed with which US markets have recovered from recent downturns demonstrates the strength of the underlying companies, but risks remain where valuations are high and performance depends on a relatively small group of large technology shares.

Rather than chasing returns, investors should consider limiting exposure to any single stock to around five percent to reduce the effect of volatility on the portfolio. A robust portfolio should be diversified across asset classes, sectors and geographies and include dividend-paying defensive shares that can help cushion volatility.

Diversification protects amid uncertainty

What 2026 has shown is how easy it is to follow the herd, with fear driving investment decisions. Diversification is therefore critical, but particularly across geographies.

For South Africans, offshore investment provides access to a broader pool of quality companies and reduces dependence on domestic political and economic outcomes. However, this does not mean abandoning South African assets. The JSE continues to offer opportunities in selected sectors, while local investments can benefit when the rand strengthens or domestic conditions improve.

The allocation between local and offshore assets should be determined by an investor’s objectives, time horizon and risk tolerance, rather than by a short-term prediction about the rand.

Resilience matters more than certainty

Successful investing in the remainder of 2026 will depend less on forecasting the next crisis and more on maintaining a resilient allocation with a long-term mindset. The investors most likely to succeed in this environment of permanent uncertainty will not necessarily be those who correctly anticipate the next crisis, but those whose portfolios do not depend on them doing so.