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Enthusiasm over AI drives equity gains
Equities gained momentum in May on the back of strong corporate earnings and sustained enthusiasm for AI and semi-conductor stocks. The conflict in Iran has remained a dominant macro variable for risk asset pricing during the period. Despite the positive performance on the equities front, growth concerns have remained persistent especially in China and the Eurozone.
Renewed confidence in Global Markets
April started on a positive note as there was a cease fire in the
US-Iran conflict, however, the opening of the Strait of Hormuz
remains a key issue as the two countries are yet to agree on a
deal to end the conflict. Global equities rallied as confidence
was renewed and there was a rotation back into AI stocks. The
DJIA surged 7.14%, Nasdaq soared 15.29% and Nikkei closed
the month 14.91% higher.
Equities surge despite uncertainty
Global markets experienced significant volatility as they buffeted significant cross currents. Geopolitical tensions escalated in the Middle East affecting the oil and gas. Investor attention was also attuned on the Supreme Court ruling e use of the International Economic Emergency Powers Act (IEEPA) to justify the “reciprocal” tariffs announced in 2025. Equities experienced a sell off as investors were focused on inflation risk as energy prices increased as opposed to the risk of lower growth rates. The tech heavy Nasdaq slid 7.11% as tech companies earning were under scrutiny during the earnings reporting season and investors rotated from tech stocks to other value stocks. The FTSE 100 surged 8.36% aided by exposure to commodities and a softer sterling.
A review of the Monetary Policy Statement
The recently presented Monetary Policy Statement highlighted that authorities maintained a tight monetary
framework and this helped achieve the stability observed over the past year. However, the use of ZWG has
remained limited with most payments being settled in USD. According to the RBZ, ZWG transactions account
for roughly 30 to 40% of the national payment system usage whilst the currency in circulation stands at about
3% of the total deposits.
The past year was marked by increased geopolitical tensions, economic policy uncertainty and a general dismal view of the future.
A positive sentiment prevailed on the equities market as companies such as General Motors and Coca Cola posted upbeat earnings during the month.
Global equities recorded gains in the third quarter propelled by positive financial results reported by companies. Balance sheets for corporates have remained strong and household spending has remained high particularly for services.
Global equities defied the adage “sell in May, go away” as they experienced significant momentum during the month, reaching historical highs.
August was largely characterised by a correction in equity prices. Global market players digested several factors, some seasonal, concerns about the state of the world economy and the Fed’s direction on interest rates.
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Smartvest Wealth Managers (Private) Limited Special Purpose Financial Statements 31 December 2024
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