The conflict involving the United States, Israel, and Iran may have triggered the latest wave of market anxiety, but executives at Sanlam believe the bigger issue is the emergence of a more fragmented and volatile global order that is reshaping investing, inflation, and consumer behaviour.
At a Sanlam media roundtable this week, Sanlam chief economist Arthur Kamp, Sanlam Private Wealth chief investment officer David Lerche, and Sanlam Retail Affluent chief executive Jean Lombard described a world in which geopolitical shocks are becoming more frequent, forecasting is becoming harder, and consumers are increasingly struggling to process uncertainty.
Kamp said the current tensions in the Middle East should be viewed within a broader structural shift away from the highly integrated global economy that characterised much of the past two decades.
He argued that the period of rising global trade, liberalisation, and economic co-operation that followed China’s entry into the World Trade Organization in 2001 helped to improve efficiency, support growth, and suppress inflation globally. That momentum, he said, has weakened significantly since the 2008 global financial crisis and has deteriorated further amid rising protectionism and geopolitical fragmentation.
The result, according to Kamp, is a world in which inflation may become more difficult to contain, and central banks may struggle to maintain inflation near long-term targets.
The immediate concern remains the oil price shock linked to the Middle East conflict and the uncertainty surrounding global supply disruptions. Kamp said the duration of the disruption will determine whether the inflationary impact remains temporary or develops into something more persistent through wage pressures and inflation expectations.
He noted that although the current oil shock is significant, it remains smaller than some previous geopolitical oil price shocks. He also argued that South Africa’s longer-term economic trajectory will depend more heavily on whether domestic reform efforts continue gaining traction.
Building portfolios for a more fragmented world
Lerche approached the discussion from a portfolio construction perspective, arguing that the changing geopolitical environment requires broader diversification and more resilient investment positioning.
He said Sanlam Private Wealth expects the Iran conflict to be relatively short-lived and is largely looking through the current market volatility rather than repositioning portfolios aggressively around short-term events.
Lerche said the bigger shift is the move towards a more contested, multi-polar global system in which investors may no longer be able to rely as heavily on the US dominating global markets.
“We have to make sure that we build portfolios for our clients that really are robust to quite a wide variety of potential geopolitical outcomes,” he said.
He said this increasingly involves adding alternative and private assets to portfolios to reduce concentration risk and improve diversification across different return drivers.
Lerche also pointed to several structural investment themes emerging from the changing geopolitical landscape, including rising defence spending, cybersecurity, weakening long-term US dollar dominance, and stronger prospects for emerging markets.
He argued that the freezing of Russian assets following the invasion of Ukraine highlighted the geopolitical risks associated with reserve currency concentration and may gradually weaken confidence in the US dollar over time.
Gold, he said, could benefit from that trend over the long term.
AI remains the bigger long-term disruption
Lerche said that despite the current geopolitical turmoil and oil price volatility, artificial intelligence remains the dominant long-term investment theme shaping global markets.
He argued that although the Iran conflict may influence markets in the near term, the more significant structural question for investors is how AI will reshape economies, productivity, and corporate profitability over the next five years.
According to Lerche, investment managers are increasingly focused on understanding how AI could change daily life, improve corporate efficiency, and influence future capital spending patterns among large technology companies.
He pointed specifically to the scale of infrastructure investment under way among major US technology firms, including Amazon, Microsoft, Google, and Meta.
Lerche said these companies are expected to spend roughly $800 billion on AI-related infrastructure in 2026 alone.
“What all 60-ish million of us in South Africa, all the economic value that we create [in one year], these guys are going to spend twice as much as that on AI factories,” he said.
He suggested that the scale of this investment illustrates how aggressively global technology companies are positioning themselves for what they expect to be a transformational shift in computing, business operations, and economic activity.
Why uncertainty is changing the role of financial advice
Lombard shifted the discussion away from markets and towards consumers, arguing that many households are already operating under significant psychological and financial strain.
He pointed to the cumulative effect of Covid-19, geopolitical conflict, political instability, inflation, interest rates, climate-related disruptions, and rising living costs.
“I think it’s a tough environment for consumers in which to operate and to make sense of where they are and what they should do,” Lombard said.
He said the uncertainty is increasingly visible in client interactions, call centre activity, and adviser feedback.
Lombard argued that many consumers are searching for certainty in an environment where even economists and investment professionals acknowledge that forecasting has become more difficult.
He said some clients are increasingly tempted to chase concentrated investment themes such as AI, gold, or oil in search of outsized returns, while others are paralysed by uncertainty.
That, according to Lombard, is changing the role advisers play for clients.
“The big job that a lot of our advisers tell us that they often do for clients is that they often act as just financial counsellors,” he said.
He argued that the primary role of advice in volatile environments is often less about predicting markets and more about helping clients to maintain perspective, avoid emotional decision-making, and remain committed to long-term plans.
Lombard repeatedly returned to diversification as the central principle underpinning both Sanlam’s own business model and individual financial planning.
He pointed to Sanlam’s exposure across multiple geographies, business lines, and client segments as an example of how diversification can help to absorb uncertainty.
Clients, he said, should approach their own financial affairs similarly rather than positioning themselves for a single macro-economic outcome or attempting to make aggressive short-term calls.
“There’s no such thing as a free lunch, but diversification might be as close as possible that you can get to a free lunch,” Lombard said.
He added that periods of uncertainty do not always require large-scale portfolio changes.
“Sitting on your hands sometimes and doing nothing is also a decision,” Lombard said.
