BROKERS’ NOTES: Buy Europe, sell rands

Simon Brown of Just One Lap on what the smart money is doing

BUY: Europe

For decades Europe has lagged the high-flying US stock market, as it lacks any serious tech and economic growth. Threats to the EU in the form of Brexit, and more recently the war in Ukraine, didn’t do much to rouse the continent from its slumber.

But now with the geopolitical shifts resulting from actions by US President Trump in the form of tariffs and aid cuts, and the risk that both Nato and Ukraine may lose US support, Europe is finally waking up .

Germany has announced infrastructure and defence spending so huge that it could top €1bn, and many other EU countries plan to allocate increased amounts to their military capabilities.

This will directly boost EU economies. But it also suggests that maybe, after decades of wine and cheese, some real economic growth may start happening in Europe. All this while money is looking for a new home outside the US. Europe could be the answer.

SELL: Rands

The rand has held on surprisingly well despite threats from the Trump administration. Sure, we still see volatility, and much of the strength is on the back of dollar weakness, but we’ll take it.

The recent trend of the currency has been to strengthen, and it looks as if this can go further. The R18.30/$ level is important and now acts as resistance, with R17.80/$ an immediate target.

After that’s reached, the greater momentum could take the currency anywhere, but here’s what’s important: don’t sit and wait for some fantastic level before you move your rands offshore. Have a clear strategy for when you’ll transfer the money, and stick to the plan.

You could do these shifts monthly or quarterly, or whenever it makes most sense in your situation. But have a plan and worry less about getting the perfect level — because you may end up worse off if you try to time it.