Despite the uncertainty in the global environment, driven mainly by geopolitical tensions, the JSE has maintained a robust start to the year — driven by positive structural reforms and local growth fundamentals that are proving to be tailwinds for SA equities.
Having started the year at 84,000 points, the all share has advanced more than 5% year to date, reaching a new record of 89,000 points as of Tuesday.
Analysts said the suspension of load-shedding due to improved Eskom power plant performance, prospects of lower interest rates and the formation of a coalition government of national unity (GNU) have all contributed to the local bourse’s strong performance, garnering optimism about the potential for enhanced policy reform implementation and a higher growth rate.
According to Shaun Murison, senior market analyst, the JSE’s resilience can be attributed to a shift towards monetary easing, both domestically and internationally.
“Declining inflation has created room for interest rate reductions, fostering conditions for economic growth,” Murison said.
“The commitment to the GNU has enhanced political stability, making SA a more attractive destination for investment. In addition, China’s stronger-than-expected economic growth is also benefiting the local market, given the significant trade relationships between the two nations,” said Murison.
Gold mining stocks have led the market’s advance, with local miners amplifying gains in the underlying metal. Major stocks with significant Chinese exposure, such as Richemont, Naspers and Prosus, are also driving the all-share and top 40 indices higher.
Kurt Benn, senior portfolio manager at Citadel Global, highlighted the strong performance of gold and Naspers/Prosus, driven by exposure to Tencent and the Chinese AI platform DeepSeek.
Alex Honegger, director and investment analyst at Capacitech, added that strong commodity prices, robust financial sector performance and foreign investor interest drove the JSE’s resilience.
“Gold miners like AngloGold Ashanti and Gold Fields have surged due to safe-haven demand, while broader commodity strength, particularly in platinum group metals, has supported mining stocks.”
Honegger also noted that the financial sector has benefited from stable interest rates and strong banking margins, with stocks like Standard Bank and FirstRand performing well. Consumer-facing stocks such as Shoprite and Woolworths have also seen gains, supported by resilient spending and improved supply chains.
Global market optimism, particularly around AI-driven growth and potential interest rate cuts, has attracted foreign inflows into SA equities, particularly in mining and financials.
“Lesser-known factors like corporate actions, high dividend yields, and the strength of local institutions have further contributed to market momentum,” Honegger said.
A significant factor contributing to the improved outlook is the resolution of the load-shedding crisis. Besides the two days of load-shedding end of January, load-shedding has been suspended since March 2024, thanks to a combination of better Eskom power plant performance and the increasing adoption of solar energy solutions by corporates and households.
“This development has had a positive impact on both the equity and bond markets. The combination of a better-performing economy and lower generator fuel costs is expected to support higher company profits,” said Momentum Investments chief economist Sanisha Packirisamy.
“SA bonds should benefit from better fiscal numbers due to a higher corporate tax take, lower Eskom bailout risk, and lower country debt default risk,” said Packirisamy.
Murison said markets will be primarily driven by inflation trends and monetary policy developments.
“While tariff uncertainty poses risks to both inflation and the pace of monetary easing, investor sentiment has improved as the Trump administration’s actual tariff implementation has proven less severe than initially feared.
“The market’s more optimistic outlook is further supported by signs that many of the tariff threats are opening doors for negotiation, suggesting that their inflationary impact may be more moderate than originally expected,” Murison said.
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