Cy Jacobs - Israel-Iran war, market volatility, oil inflation risks, and SA’s investment resilience

Cy Jacobs, co-founder of 36ONE, shares insights on the ongoing Israel-Iran conflict, its potential duration, and global market impacts. He explains rising oil prices, inflation risks, and how investors can protect portfolios through cautious equity selection, hedge funds, and rand-hedged assets. Jacobs also highlights South Africa’s resilient market, strong dividends, and emerging opportunities amid global uncertainty..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.BizNews Reporter.The current geopolitical landscape has created unprecedented challenges for investors, with the recent escalation between Israel and Iran dominating headlines. In a detailed discussion with Alec Hogg, Cy Jacobs, founder and chief investment officer of 36ONE, offered insights on the implications for global markets and the strategies investors can adopt to navigate volatility.Jacobs emphasised that the Israel-Iran conflict is unlikely to be short-lived. “This has been in the making for some time,” he explained. “Iran has decades of military build-up, and the task of mitigating the threat is exceptionally large. The scale of the country and its arsenal means it will take time, and the impact could be more severe than initially anticipated.” He highlighted the complexity of international alliances, noting that while the US supports Israel, other global powers, including Russia and China, may align with Iran, making the outcome unpredictable.The conflict has already affected markets, particularly through rising oil prices. Jacobs pointed out that the market initially responded with a flight to safety, but the escalation has caused further uncertainty. “Oil prices are up, and this is inflationary,” he said. However, he also noted potential mitigating factors, such as alternative oil supplies from countries like Venezuela, which could help stabilise global energy markets.For investors, the key takeaway is caution. Jacobs stressed that individual investment mandates must guide strategy. “Clients with long-only South African equity mandates may experience some short-term impact, but the broader market has been resilient. We focus on equities with low multiples, high dividend yields, and some exposure to gold and rand-hedged assets,” he explained. In hedge funds, 36ONE has reduced exposure to higher-beta equities and shifted toward more conservative positions, including cash and short positions, to protect portfolios during periods of volatility.Despite global uncertainty, Jacobs highlighted the strength of the South African market. “The local market is not fully representative of the economy, but it offers steady companies with strong dividends and rand-hedged components, providing a degree of safety,” he said. He noted that, in dollar terms, the South African market has outperformed many international indices over the past five to ten years, underscoring its potential as a long-term investment destination.Jacobs also commented on regulatory changes affecting offshore investment. The discretionary offshore allowance in South Africa has increased from R1 million to R2 million, providing investors with more flexibility. “For most investors, this change is a non-event,” he explained. “It primarily affects those who previously exceeded the allowance on international travel or card spending. For genuine offshore investments, the process remains well-regulated, and compliant taxpayers face no real limitations.”Looking ahead, Jacobs urged investors to exercise patience. “We do not anticipate a regime change in Iran in the near term, and the conflict could be protracted. This is not a time to be brave. Defensive positioning in balanced funds and hedge funds is prudent, and cash remains king for the moment.”Despite the global challenges, Jacobs remains optimistic about opportunities within South Africa. Improvements in interest rates, export performance, and infrastructure developments, such as Eskom and Transnet, have bolstered the local economy. Additionally, resource-heavy sectors and emerging market equities offer potential for growth. “If global tensions ease, South Africa’s market is well-positioned to benefit,” he said.In summary, Jacobs emphasised a measured, strategic approach in uncertain times: focus on diversification, hedge where possible, and prioritise assets that provide stability and income. While geopolitical risks pose immediate challenges, the long-term outlook for disciplined investors, particularly within South Africa, remains promising.

Cy Jacobs - Israel-Iran war, market volatility, oil inflation risks, and SA’s investment resilience

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