Weekly Squawk, written by Stewart Dando.

Hot Topic

Bargain hunting…

Indonesia has endured a difficult year. Its stock market has been one of the worst performers globally, with the Jakarta Composite Index falling more than 35% in US Dollar terms. Investor confidence has been shaken by concerns over market accessibility, fiscal policy, governance and the possibility that Indonesia could lose its emerging market status. For many investors, these developments have been enough reason to stay away. Not Allan Gray.

The Cape Town-based asset manager has instead used the recent sell-off to make its first investment in Indonesia, arguing that periods of market pessimism often create opportunities for patient, long-term investors.

As portfolio manager Rory Kutisker-Jacobson explains: "Periods of heightened volatility and investor uncertainty present a particularly fertile hunting ground for patient, valuation-driven investors in frontier markets." He adds that such markets are often overlooked by global investors, creating pricing inefficiencies and, at times, compelling investment opportunities.

Indonesia Stocks Underperform Asian Equities Index — Bloomberg — Source: Bloomberg

The firm's first investment was in PT Indofood Sukses Makmur, one of the world's largest producers of instant noodles. Allan Gray believes the company trades at an attractive valuation despite its strong market position and ability to generate consistent cash flows.

"On our estimates, INDF trades on just over five times earnings, which we believe is a good price to pay for a dominant, cash-generative, consumer-facing business," Kutisker-Jacobson said.

The decision highlights an important investment principle. Markets often become overly pessimistic during periods of uncertainty, causing share prices to fall well below their intrinsic value. While the risks facing Indonesia remain real, long-term investors are less concerned with today's headlines than with whether quality businesses can be purchased at attractive prices.

That approach has served Allan Gray well over many years. Rather than chasing markets that have already performed strongly, the firm has built its reputation by seeking value where others see risk.

Whether Indonesia ultimately rewards that conviction remains to be seen. However, the episode serves as a timely reminder that some of the best investment opportunities emerge when uncertainty is highest and investor sentiment is at its weakest.

The opinions and views expressed in this newsletter are those of the author and do not necessarily represent those of the attooh! Group or its affiliates. Content stated as fact was fact at the time of writing. The information in this newsletter is not intended to constitute financial advice as contemplated in the Financial Advisory and Intermediary Services Act.

Interesting Stuff

The week ahead: Investors will continue to monitor developments in the Middle East after renewed US-Iran hostilities rekindled concerns over potential disruptions to global oil supplies.

Earnings season will also take centre stage, with several major US banks set to report, alongside Netflix and J&J. Meanwhile, Federal Reserve (the Fed) Chairman Warsh may provide further details on potential Fed reforms during his congressional testimony. On the economic front, investors will focus on the US June CPI report, the Michigan consumer sentiment, retail sales, and housing data. In Europe, the UK will release its May GDP figures. Meanwhile, China will publish a raft of key economic indicators, including Q2 GDP, trade balance, monetary aggregates, industrial production, retail sales, unemployment, and house prices.

Under pressure: Gold slipped below $4,100 an ounce this morning, remaining under pressure as renewed missile strikes between the US and Iran drove oil prices higher, fueling expectations of interest-rate hikes to curb inflation.

The US carried out its fourth strike in a week against Iran on Sunday in retaliation for an Iranian attack on a Cyprus-flagged container ship. Tehran declared that the Strait of Hormuz would be closed 'until further notice,' though the claim was dismissed by the US Central Command. As mentioned, investors are also awaiting key US inflation data due this week for further clues on the Fed's policy outlook. Markets currently expect the Fed to deliver one more interest-rate hike before the end of the year. Meanwhile, Fed Chair Kevin Warsh is scheduled to make his first appearance before the US Congress tomorrow.

Meanwhile, in New Zealand: The BusinessNZ Performance of Composite Index increased to 53.6 in June 2026 from an upwardly revised 49.9 in the previous month. It marked the first expansion in the private sector since January and the strongest growth since December 2025, as the services sector returned to expansion while manufacturing grew at its fastest pace since July 2021.

Manufacturing activity expanded despite continued pressure from high fuel prices, with all manufacturing sub-indices remaining in expansion territory. Meanwhile, the services sector returned to growth as new orders and supplier deliveries moved back into expansion. In contrast, activity/sales, stocks, and employment remained in contraction territory, although at a slower pace. However, the recovery appears tentative rather than the strong rebound seen in the PMI this month.

Periods of heightened volatility and investor uncertainty present a particularly fertile hunting ground for patient, valuation-driven investors in frontier markets

The Week in the Media

Jargon of the week

What is a 'Yield Curve'?

A yield curve is a line that plots the yields or interest rates of bonds that have equal credit quality but different maturity dates. The slope of the yield curve predicts the direction of interest rates and the economic expansion or contraction that could result. Yield curve rates are published on the United States Department of the Treasury's website each trading day.

Source: Investopedia

Article of the week

Asset allocation explained: why staying invested matters most

Volatile markets can tempt investors to change course, but history shows that reacting to short-term uncertainty can do more harm than staying invested.

Read full article on Moneyweb →

In Conclusion

A second downgrade…

The International Monetary Fund (IMF) downgraded global growth prospects for the second time this year, saying it expects the global economy to grow by just 3% in 2026. In January, this projection had still stood at 3.3%. While the downgrade is slight, it still conveys the multiple risks to the global economy currently present. As shocks from the Iran war persist, driving up the price of energy and other traded goods, disinflation has stalled and financial markets continue to be at risk of negative reactions. The IMF saw a positive aspect in the global AI boom, creating an increase in demand for related technologies.

Two countries upgraded since the last forecast were China and the UK, the latter one on a very low level, however. Other countries where economic growth is paper-thin and decreasing are France, Germany and Japan. All three are expected to grow by only 0.6–0.7% each this year. This number was as low as 0.9% for the Euro Area and 1.1% for Canada, giving rise to some doubts around the economic prospects of developed countries in general. The IMF meanwhile said the global economy weathered the current shocks 'better than feared'.

IMF Downgrades Global Growth Forecast Second Time in a Row — Statista — Source: International Monetary Fund via Statista

The organization also said that global first-quarter growth in 2026 turned out better than expected at an annualized 3.0% quarter-over-quarter, slightly above forecast. According to the IMF, the rise in renewable energy use was making economies less vulnerable to elevated energy prices which are currently an issue. The AI boom also helped some countries and territories to achieve better economic growth numbers, but this was mostly limited to Taiwan, South Korea, Thailand and Malaysia. China could also grow more than expected on the back of public investments and a high-tech manufacturing surge. Much of the rest of the world, however, pretty much suffered the negative effects of the current crisis without many upsides.

The IMF concludes that risks to the world economy were more balanced than in April, but still pointed in a negative direction as both peace in the Middle East and gains from the AI boom remain fragile. It also cautions that trade tensions could resurface as a result of war-induced shortages, which would put an additional damper on the economy.

Monarch Minute

Marc Thomas

Head of Investments for attooh!

Monarch Model Portfolios: Professional Investment Management, So You Don't Have to Worry

Today's investment environment is more complex than ever. Selecting suitable funds, blending them into an appropriate portfolio, managing risk, monitoring markets and maintaining the right asset allocation requires significant expertise, time and ongoing oversight.

The Monarch Model Portfolios simplify this process by combining professional portfolio management with a disciplined investment approach. Rather than relying on individual fund selection alone, the portfolios are strategically constructed to deliver inflation-beating returns over the long term while remaining aligned to each investor's risk profile.

A key advantage of the Monarch Model Portfolios is the involvement of a specialist discretionary fund manager (DFM). The DFM is responsible for portfolio construction, strategic asset allocation, ongoing monitoring and disciplined rebalancing. This ensures that investment decisions are made consistently using a robust investment process, rather than reacting to short-term market noise.

The portfolios also benefit from the expertise of leading global investment firms. Global asset allocation insights are supported by BlackRock, the world's largest asset manager, while local market research is provided by RisCura. Together with Cogence, the appointed DFM, these specialists help ensure portfolios remain globally diversified, strategically managed and appropriate for their intended risk and return objectives.

Importantly, the Monarch Model Portfolios are designed to stay invested through changing market conditions. Their objective is not to outperform every market movement, but to maintain an appropriate strategic asset allocation, manage risk effectively and pursue long-term inflation-plus returns.

In short, the Monarch Model Portfolios provide investors with the confidence that their investments are being professionally managed, allowing them to remain focused on achieving their long-term financial goals rather than responding to short-term market events.

Monarch Model Portfolios — Professional Investment Management

Bargain Hunting, Gold Under Renewed Pressure, and Another IMF Downgrade, the Numbers Are Not as Good as They Were

Jargon of the week

Article of the week

Quote of the week

A second downgrade…

Monarch Model Portfolios: Professional Investment Management, So You Don't Have to Worry