The JSE all share index’s (Alsi’s) triumphant march through the 100,000-point level last week was heartening — at first glance.
Old-timers in the market will remember the days after the 2008 financial crisis, when a good number of shell-shocked market watchers would have bet against the Alsi ever seeing 30,000 points again.
For index-huggers, it’s been a grand old time of late, with the Alsi up 74% over five years. For the first seven months of this year, the index is up close to 18%, and comfortably more than 20% over 12 months. On the 12-month measure, the JSE is in line with the tech-heavy Nasdaq (21% up over a year at last count) and pips the New York Stock Exchange’s S&P 500 index (up about 17%). The JSE is also well ahead of the London Stock Exchange’s FTSE index, and the Nikkei.
If only this were reflected in the real South African economy, which continues to labour sluggishly. The structural imbalances in the Alsi preclude its consistent upward chug as an accurate gauge for South Africa Inc.
First off, major index constituents Naspers and Prosus — which are international tech proxies — are up about 70% over a year. Then the resource 10 index, mostly made up of multinational miners, has surged 36% on markedly stronger prices for gold and platinum group metals. International beer giant AB InBev, which incorporates the old South African Breweries, has risen more than 30% year to date.
The JSE’s small- and mid-cap indices — much more reflective of local endeavours — have made sprightly gains of 16% and 18% respectively. But the real local economic markers, the financials and retailers, are up only 10% and flat over 12 months.
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