By: Rico Ernst, CEO at Aurora Capital SA
Global financial markets have always been complex and cyclical. But what we are seeing now is not just a fluctuation in sentiment or interest rates; it is a reordering of international relations, power structures, and trade dynamics. At the heart of this volatility is the resurgence of Donald Trump and the ripple effects of his geopolitical agenda. As CFOs, we do not have the luxury of reacting emotionally or politically. We need to read between the lines, assess risk rationally, and act decisively.
We are entering a period defined less by economic fundamentals and more by political signals. Policy now moves markets faster than earnings reports or GDP forecasts. Elections, sanctions, executive orders, and diplomatic fallout drive investor sentiment with little warning. This politicisation of international finance amplifies volatility, particularly for countries like South Africa that sit on the periphery of global power but remain fully exposed to its consequences.
For CFOs, this means the traditional tools of financial planning, models based on historical data, and forecasts rooted in cyclical trends, are no longer sufficient on their own. We must interpret risk not only through economic data but also through an evolving geopolitical lens. What once felt distant, such as US trade policy or China’s regulatory direction, now affects our currency, our capital flows, and our clients’ decisions. Ignoring these shifts is no longer an option. Preparing for them is now a strategic imperative.
The Trump effect and the fragility of global trade
Trump’s political resurgence, coupled with his nationalistic economic rhetoric, is reshaping the global order. His renewed focus on trade deficits, particularly with China, has ignited tensions that spill over into emerging markets. South Africa is not exempt. Trump’s hardline stance on trade agreements, including comments about AGOA (the African Growth and Opportunity Act), poses real risks to our economy and investor confidence.
In my view, the concern is not whether Trump’s trade position is right or wrong. The issue is the unpredictable and often unilateral manner in which these policies are introduced or revoked. That kind of inconsistency is what markets fear most. If a treaty is removed overnight, South African exporters lose access, our currency weakens, and investment slows. These are not theoretical risks, they are immediate and measurable.
Uncertainty grows with business sentiment eroding. Currency markets respond aggressively and supply chains face disruption. Contracts require urgent renegotiation. In this environment, CFOs face capital flight. Import costs spike and export margins shrink. Long-term forecasts break down at a time when cross-border funding becomes volatile. Compliance risks multiply and central banks start to intervene. All told, risk has become the reality we all face.
Short-term capital allocation: Liquidity, not panic
For CFOs, the short-term response to this kind of volatility must prioritise liquidity. When uncertainty peaks, flexibility becomes our greatest asset. We advise clients and institutional partners to ensure a portion of their holdings are in cash or near-cash instruments. That does not mean abandoning yield; it means recalibrating expectations.
Chasing yield during times of political instability is like speeding through a fog. It is tempting but incredibly risky. Instead, we emphasise building optionality into short-term capital allocation. This allows us to pivot as new developments unfold, whether that is a policy reversal, sanctions, or a sharp currency swing.
The unpredictability of global policy decisions, especially when driven by election cycles, makes long-term clarity elusive. When tariffs shift or treaties are suddenly scrapped, there is no time to restructure a rigid portfolio. Liquidity buys time. It creates the ability to think instead of reacting. Rather than fearing volatility, we treat it as a condition to be managed, not a crisis to escape.
Medium-term strategy: Manage around the noise
If you are investing with a one-to-three-year horizon, it is easy to be distracted by the news cycle. But volatility is not new; what has changed is the frequency of market-moving events. With the speed of information today, we are seeing micro-cycles within macro trends. That does not mean CFOs should change their core strategies every time a headline breaks. It means your strategy must account for rapid change.
At Aurora, we mitigate medium-term risk by diversifying across geographies, sectors, and, importantly, asset classes that are not overly correlated to political risk. This includes alternative investments and tangible assets like infrastructure or income-generating property which tend to respond more predictably to structural economic forces than to political theatre.
We also encourage CFOs to strengthen scenario planning. What if interest rates do not fall as expected? What if the dollar continues to appreciate? What if a key trade agreement is suspended? Planning for multiple outcomes does not mean you are hedging every bet. Rather, it means you are preparing your organisation to act without panic.
Uncertainty dominates. Strategy must absorb shocks. Decisions must consider instability. Portfolio managers often react too late. Exit strategies should be built in. Entry strategies should be pre-planned. Rebalancing should happen ahead of impact. Delays reduce agility. News cycles create noise. The signal gets lost. Forecasting tools help, not solve. Risk is layered. Some events will never be priced. Political cycles distort economic logic. Treaties change overnight. Trade partners shift focus. Trust in markets erodes. Short-termism dominates. Aurora avoids the herd. We manage volatility, not chase returns. Medium-term resilience wins. Not a reaction. Not emotion. Not blind optimism. Just preparation.
Long-term considerations: Structural shifts are underway
Looking beyond 2025, we believe the biggest shift CFOs need to prepare for is not interest rates or inflation but a fragmentation of the global trade ecosystem. If Trump continues to undermine multilateralism, we will see further weakening of institutions like the WTO and more bilateral deals shaped by political allegiance rather than market logic.
This could lead to:
- Increased cost of cross-border trade
- Currency volatility as dollar dominance is both challenged and entrenched
- More capital flowing into politically “safe” jurisdictions, creating liquidity gaps elsewhere
The implications are significant. South African CFOs cannot rely solely on traditional global exposure to drive returns. The concept of “investing globally” must evolve beyond buying into developed market ETFs or chasing USD-linked yields. We need to build portfolios that consider structural resilience, not just historical performance.
Global trade no longer functions as a neutral system. Policy changes arrive without warning and treaties collapse. Tariffs spike. Planning becomes reaction. Furthermore, South Africa is losing leverage as gold no longer carries weight. The era of resource-backed negotiating power has ended. Today, the dollar dictates terms. Trade favours scale, not fairness. Politically aligned economies get preference with emerging markets falling even further behind.
CFOs must rethink exposure and align portfolios with new realities. They also need to seek stability beyond tradition. The focus shifts to BRICS, to regional blocs, and to alternatives beyond the usual safe havens. Passive investing falls short and geographic diversification alone is not enough. Long-term strategy now demands political analysis, economic agility, and structural foresight. Aurora positions ahead with the company modelling worst-case scenarios. We invest beyond headlines and build for permanence in a fragmented world.
Turning risk into opportunity
We embrace volatility as a natural part of the investment landscape. Our framework prioritises two key principles: understanding risk deeply and ensuring our investments are not overly correlated to global sentiment.
This means we spend significant time modelling how different global scenarios could affect each part of our portfolio. For example, if AGOA is suspended, how would that affect a local logistics business we are exposed to? If China slows down further, what does that mean for commodity-driven investments? These questions are not hypothetical. They are embedded into our due diligence and portfolio review cycles.
We also seek out uncorrelated assets, for instance, investments that move independently of major indices or political risk factors. This is especially important in South Africa, where the local market is relatively small and highly concentrated. Relying on traditional listed instruments often leads to crowding and similar performance outcomes. Our alternative investment strategies, which include private debt and bespoke yield-bearing structures, give us better control and more predictable performance.
Traditional thinking limits outcomes. At Aurora, we do not rely on repackaged solutions. We develop forward-looking positions. We build resilience through differentiation. We believe risk, properly understood, is not something to avoid but rather something to use. That mindset turns volatility into value.
Advice to fellow CFOs: Do not wait to react
Act early. Think clearly. React slowly. That is the mindset needed now. Market shifts no longer arrive gradually. They land overnight. Policies change mid-quarter. Trade alliances disintegrate without warning. CFOs cannot afford passive observation. Waiting for clarity means forfeiting position.
In our experience, the best-performing portfolios are built with embedded flexibility. Entry and exit points should not be improvised. They should be designed. Liquidity buffers should not be accidental. They should be intentional. Risk parameters must be reviewed more frequently. Governance must tighten. Reaction time must shrink.
Avoid copy-paste solutions. Relying on legacy approaches simply because they worked in calmer cycles exposes organisations to avoidable risk. Strategy requires depth. It requires conviction. Most importantly, it requires discipline before disruption.
The next crisis will not send an invitation. CFOs who act now will have tools ready. Those who wait will be left explaining what went wrong. We choose readiness over regret. Every time.
A final word on uncertainty
Risk is not the enemy. Uncertainty is. If risks are known, they can be priced, mitigated, or transferred. But when the rules of the game shift unexpectedly, as they have in the Trump-era US, uncertainty becomes the dominant market force.
Moreover, uncertainty creates paralysis. It undermines confidence and distorts decision-making. Tariffs appear without warning and treaties can vanish overnight. Political sentiment drives economic outcomes. Forecasts lose relevance with long-term planning becoming guesswork. That is not risk. Think of it as structural unpredictability.
Our job as CFOs is to manage through that uncertainty, to keep our organisations agile, and to build portfolios that endure across cycles, not just benefit from the last one. We must become comfortable operating without all the answers. Comfortable in ambiguity. Prepared for disruption. Positioned for resilience.
That requires courage. Not bravado, but clarity. Measured clarity is rooted in preparation, modelling, and the ability to act without panic. Leadership in uncertain times is not about predicting what comes next. It is about staying disciplined, no matter what happens.
Uncertainty will not fade. Complexity will only increase. The CFO’s role has evolved from financial steward to strategic risk navigator. In this new reality, clarity is not optional. It is the only sustainable advantage.
Aurora Capital SA (Pty) Ltd is an authorised financial services provider, FSP number: 54262
