MARKETS IN A NUTSHELL — FOR MAY 2025

May brought a new pontiff to Rome and a fresh breeze to markets after Beijing and Washington stepped back from the tariff cliff. The two countries agreed to steeply cut bilateral tariffs and pause further escalations for 90 days. Investors cheered the news: US equities enjoyed their best month in over a year, with the S&P 500 Index jumping 6.2%. Developed market stocks rallied broadly, recovering strongly after April’s turmoil. Emerging markets gained less enthusiastically, with Chinese equities posting a more moderate rise.

In Washington, the House squeaked through President Trump’s ‘Big Beautiful Bill’. The bill extends his first-term tax cuts and ramps up spending on defence and border security. Bond investors took fright on the deficit and debt implications. A lukewarm Treasury auction compounded matters, with US 30-year bond yields briefly punching through 5% before settling again. The dollar slid to six-month lows on debt-sustainability angst.

The share market gains belie the fact that global growth is at risk. The US economy contracted in the first quarter as buyers front-ran the tariffs. Consumers are becoming more frugal and there are more signs of financial stress on families and on main street. Bankruptcies are soaring. In China, the property sector woes continue, yet the mainland economy is not at a standstill. Industrial production and retail sales surprised on the upside, and infrastructure spending remains robust. There may also be property green shoots, after a private survey suggested new house prices edged higher in May.

Commodity price moves were relatively subdued this month. Gold was flat on the month as rising risk appetite offset safe-haven demand. Oil remained subdued on global growth worries, but copper jumped on hopes of revived Chinese demand. 

After two failed attempts, South Africa finally passed its 2025 national budget in May. We avoided the contentious VAT hike but instead suffered a hefty fuel levy increase. The third-time’s-the-charm budget helped shore up confidence in South African fiscal management. SARB cut the repo rate, bringing SA rates into neutral territory, with inflation nearing 3.0%. SA shares rose in line with global trends and SA government bonds gained as bond yields eased. The rand rallied against the US dollar to its strongest level of 2025 so far — buoyed by improved sentiment and the budget resolution.

Foord’s portfolios also benefited from May’s upswing, with all strategies posting solid gains for the month. The conservative Foord International Fund was the standout performer. The fund rose 4% in US dollars in May, taking its year-to-date advance to 13% — eclipsing even the Foord Global Equity Fund, which has gained 10% during the turbulent Trump presidency. The Foord Asia ex-Japan Fund is also showing its stripes, rising 6% in May and almost 12% for the year-to-date. 

While May’s rally lifted investor sentiment, we remain mindful of heightened risks. These include ongoing tariff uncertainty — since the reciprocal tariffs are paused, not removed. There are also severe geopolitical tensions and the legislative hurdles facing Trump’s ‘Big Beautiful Bill’, which must clear the Senate before becoming law. These risks, coupled with fragile global growth prospects and concentrated equity markets, suggest the need for caution. 

In times like these, we believe that maintaining a disciplined, valuation-driven approach is more important than ever. Foord’s portfolios continue to be positioned for resilience, with diversified exposure to high-quality businesses across regions and sectors. Market dislocations can be unsettling, but they also create opportunity for patient investors. As always, we aim to protect and grow capital sustainably through all market cycles.