Positioning Portfolios for an Unstable Equilibrium

Rezco Asset Management hosted an investment webinar on 15 October 2026, with Chief Investment Officer Rob Spanjaard and CEO & Portfolio Manager Simon Sylvester presenting views on positioning portfolios for an unstable equilibrium. As a South African asset manager, Rezco explains where global AI pricing, the cost of capital and SA Inc. valuations do not line up, and how that shapes unit trust and segregated portfolio decisions.

What this webinar covers

This webinar replay covers Positioning Portfolios for an Unstable Equilibrium and how Rezco interprets current markets for clients seeking risk-adjusted returns. The session focuses on a market that does not quite add up: the AI build-out is priced as if it must succeed, governments and companies are competing for the same pool of capital, and South African shares have been marked down on a fuel-price scare rather than a change in the reform path. Simon presents; Rob takes questions. The core presentation runs about an hour, followed by a longer discussion.

A note for Rezco clients

Simon opened with the client ballot on the management company. Rezco Asset Management — the investment process, philosophy and team — stays as it is. The plan is to move the management company from Rezco Collective Investments to Prescient, so the funds would be white-labelled with Prescient. The point of the move is Prescient’s scale as an operator, and more of Rezco’s attention on asset management. An investor letter with the detail is on the website. Questions can go through the webinar or to info@rezco.com.

Key themes discussed

• An unstable equilibrium — too many borrowers, and inflation that stops central banks from printing
• AI enablers priced for the build-out; adopters left cheap
• Models getting cheaper, and capex into assets that obsolesce faster than railroads or fibre
• SA Inc. mispriced on a cyclical fuel shock, not a structural break
• A hawkish Reserve Bank taking pain now for a lower inflation regime
• Political risk that is two-sided, with a positive skew toward delivery
• All Share construction — precious metals, banks, and an SA Inc. tail small enough to ignore
• Stock picking, selling what has become expensive, and staying with compounding winners

Macro and market context

2025 rewarded indices and precious metals. 2026 has been messy: concentrated pockets of performance, an All Share weighed down by gold giving back last year’s rally, and SA Inc. down year to date. In February the Bank of America survey showed South African equity bullishness at a decade high, on reform and politics. Sentiment then flipped bearish because the petrol price rose. Rezco treats that as cyclical. The rand fuel price spiked and will be absorbed; it is not a permanent vertical. The structural case — a country being run a little better, with a backlog of capex still to come — is intact, even if bureaucracy makes it slower than hoped.

Globally, earnings growth is dominated by companies supplying the AI build-out. Without that, equity markets would be much lower. The largest AI-linked names are an unusually large share of the S&P 500 on a multi-decade view. Chipmakers rerated hard on hope early in the year, then the question became whether AI settles as a powerful utility rather than a perpetual scarcity. The cost of completing a task has fallen sharply. Chief information officers are shifting toward open-weight models they can run themselves — the pattern of a commodity, not a tollbooth. Hyperscalers that used to return cash are now consuming it. Governments are borrowing into a boom, inflation is sticky, and 30-year yields have reset higher. Equity volatility is calm while bond volatility is not. That is the unstable equilibrium: the capex, the deficits and the wars cannot all be funded at the old price of money, and nobody can answer it with another round of quantitative easing.

Companies, sectors and ideas mentioned

• Discovery — still owned; earnings have grown with the price, an AI adopter with a long runway
• Netcare — digitised before the current AI wave, including earlier detection in hospital wards
• Dis-Chem and Woolworths — sold off year to date; Rezco thinks the Checkers Sixty60 narrative has overshot two businesses with real customer propositions
• Shoprite / Checkers — a brilliant operator; delivery on a scooter is easier to copy than fresh-food quality
• Omnia and AdvTech — owned, then sold once the valuation had done its work
• SA retail banks — a much lower weight; new competitors with a better, cheaper product
• Precious metals — a large slice of the All Share, and not where the year’s outperformance came from
• AI infrastructure — chips, data-centre landlords, neo-clouds and hyperscalers, where too much of the future profit has been allocated

Rezco’s risk and portfolio views

The philosophy is unchanged: find compounding earnings, do not pay too much, stay patient, and manage portfolio risk. The biggest risk for a client is not volatility. It is failing to earn enough, over many years, to meet the goal. The job is to take good risk and refuse bad risk.

On AI, Rezco is bullish on the technology and cautious on the shares that own the plumbing. The internet changed the world and still produced a bust in the companies that laid the cable, because the spend overshot and the assets lasted. Chips obsolesce in a handful of years, not fifty. Circular purchasing and mark-to-market gains on private stakes are not the same thing as a customer paying for a better product. The opportunity Rezco wants is in the adopters: businesses that already had a technology stack, that can use cheaper intelligence to widen a moat, bought at a sensible multiple. Discovery growing around 15% at about 13 times earnings is the shape of that. Index-level exposure does the opposite — it concentrates the client in the build-out.

Inside Rezco the same tools are already in use. Portfolio managers Rob, Simon and Sean cover more of the primary research themselves, with a mix of off-the-shelf and custom models, instead of handing the first pass to a bench of junior analysts. Experience is what separates signal from noise; the tools amplify that, they do not replace it.

In South Africa the setup is different from the global one. Risk is lower than the state-capture and load-shedding years, and earnings growth has picked up, even if the fuel price has wobbled the near-term path. Rate cuts expected at the start of 2026 became hikes. The Reserve Bank’s hawkishness is painful for the consumer and useful for the country: it is pulling inflation expectations down, and the gap between South African and US bond yields has narrowed. SA Inc. now trades on the sort of rating the market used when the country was still a coin toss. Rezco does not think it is.

The All Share is not a neutral portfolio. A large weight in precious metals, a competitive financials sector, and an SA Inc. tail of hospitals, education, hotels and retailers that have become small enough for benchmark-aware managers to ignore — that is geography and history, not a risk budget. Rezco’s weight sits in that diversified SA Inc. sleeve, with much less in the retail banks. Omnia and AdvTech show the other half of the discipline: buy a good business the market has dismissed, then leave when the price has caught up and the downside is no longer the smaller number. Discovery is the counterexample — the price rose with earnings, so the position stays. Dis-Chem and Woolworths are the current argument: share prices down hard, franchises intact, and a delivery narrative that confuses a fixable app with a moat.