Trump presidency poses risks and opportunities for SA – Ninety One boss

Hendrik du Toit says we have entered a new era of ‘American exceptionalism’.

With Donald Trump’s return to the White House, global markets and international relations are bracing for shifts in American policy. The implications of Trump’s ‘Make America Great Again’ philosophy are wide-ranging.

This is according to Ninety One CEO Hendrik du Toit, who was speaking to Moneyweb editor Ryk van Niekerk on RSG Geldsake on Wednesday. “For South Africa, the Trump administration poses both risks and opportunities,” he says.

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“The Trump win was bigger than most people expected, but we’re in a new world where the American voter voted for what Americans call American exceptionalism.

“The rest of the world will just have to live with it, whether we like it or not.”

Du Toit says the change could see South Africa regarded as less relevant to the US. “From a South African point of view, the important point is that the relevance of Africa will be less to the Trump administration than it was to the Biden administration or would’ve been for the Harris administration.”

South Africa will have to work harder to secure its place in US trade and economic policy discussions, especially as the likelihood of sudden tariffs and trade restrictions grows. “We have to make ourselves relevant,” says Du Toit.

“We have to prepare for tariffs we weren’t necessarily expecting because these things are going to happen quickly.”

Reflecting on Trump’s initial term, Du Toit notes the dual impact of his policies. “A strong America and a responsible America is good for the world; a strong America on its own is very dangerous for the world.”

During Trump’s first term, he took a critical stance on America’s role in foreign conflicts, choosing instead to focus on domestic issues like inflation – which resonated with voters.

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Du Toit warns, however, that Trump’s policies could become even more programmatic this time around, with support from intellectual institutions like the Heritage Foundation. This consolidation of power may raise global concerns, as it could signal a move toward “more concentrated power in the presidency” – which he describes as “not a good example to the rest of the world”.

Investment opportunities?

Despite the potential risks, Du Toit acknowledges that Trump’s policies may bring short-term gains for investors.

“In the short term, the American economy will be very positive, and you can already see it in the markets,” he says, adding that this may present SA with valuable opportunities.

“South Africa needs to negotiate with this America and work out how we can further our own interests. It’s not about whether we like the government or not; it’s about how we work with that government.”

Du Toit points out that Trump’s return could also bring a measure of stability to certain global security issues, especially regarding relations with adversarial nations. ADVERTISEMENT: CONTINUE READING BELOW

“Where the Trump administration will be good for the world is in having someone in the White House who can take a strong position,” he says, referencing the potential for a firmer stance on countries like Russia and North Korea. This approach, Du Toit suggests, may serve as a deterrent, as Trump is unlikely to “coddle” or make concessions to such nations. By establishing clear boundaries, the administration could help contain aggressive actions that threaten global stability.

Challenges and long-term risks

The more significant risk, Du Toit suggests, lies in Trump’s aggressive trade policies, which could disrupt the global economy.

“An overreaction to campaign promises – much higher tariffs, walls – which then disrupts the global economy, the flowing of goods, and the value chain,” he cautions.

Another area of concern is the progress made under President Joe Biden’s Inflation Reduction Act, which supported clean energy initiatives. If these policies are rolled back, it could hinder global efforts to address climate change.

“The biggest risk is that the important progress the Biden administration made through the Inflation Reduction Act to address the world’s energy crisis, and specifically to further clean energy, may take a step back,” Du Toit warns, although he notes that certain Republican-led states may continue to support these initiatives due to their economic benefits.

A competitive world for capital and markets

Du Toit sees a strong US dollar, intensifying competition for capital globally.

“We’re going to see American dollar strength for a while, and the rest of the world will compete hard for capital and opportunities in the world’s biggest market,” he says.

Interestingly, Du Toit believes Trump’s approach could ease tensions with China, as he may seek to negotiate rather than apply pressure, as previous administrations have done.

Ultimately, he sees Trump’s term as an affirmation of America’s global influence. “We are still in the American century, [whether we] want it or not, and I think Trump might in this term demonstrate the peak of America’s relative power in the world.”

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