A majority of fund managers expect the JSE’s all share index to breach the 100,000 points mark in the next 12 months — in a move that might potentially add R2-trillion to the bourse’s market value with more runway for further growth due to the undervaluation of SA’s equities.
The all share index has rallied 10% so far this year, pushed higher by resources and industrial stocks — with market players expecting this rally to continue.
The resources stocks have surged 30% year to date, while industrials are up nearly 13%. A fund managers’ survey by Bank of America, conducted by Ipsos found a large chunk of asset managers expect the all share to reach the 101,000 mark in the next 12 months.
The index has already breached the 90,000 mark for the first time this year, buoyed by a rally in gold mining stocks as the price of the safe-haven metal continues its record breaking run.
SA’s largest gold mining houses — Harmony, Gold Fields, Anglo Gold Ashanti and Sibanye — are all up more than 40% this year.
The survey also shows most asset managers expect SA’s equity market to return double-digit growth.
Some of the preferred sectors include banks and apparel retail. The all share index went up 0.29% on Tuesday, reaching 92,763 and inching ever closer to the magical 100,000 mark.
Gains on the day were led by Sasol, Impala Platinum, Sibanye and Northam Platinum, while Anglo American Platinum also had a strong showing.
Mark Randall, director for information services at the JSE, said prediction of the all share index breaching the 100,000 mark, implies growth of nearly 10% from current levels.
“Please note that the index only measures free-float adjusted price performance. So, it is not a perfect proxy for market capitalisation though there is a very strong correlation. For instance, new listings, terminations, suspensions, capital raise, and so on, do not impact the index level,” Randall said.
“Also, the index represents 99% of listed companies and excludes fledgling companies and tradable products like ETFs, ETNs, structured products, warrants and so on,” he said.
“Having said that, the current market capitalisation of the JSE equity market is R20.95-trillion so an 8.9% increase on top of that due to price movements would increase the value to
R22.82-trillion all things being equal.”
SA’s stocks have rallied since the formation of the government of national unity (GNU) a year ago, which was seen as market friendly with the ANC and DA at the helm of the governing coalition.
The rally was rudely interrupted in April, plunging 14% after US President Donald Trump’s “Liberation Day” tariffs spooked global markets. The tariffs, which have since been suspended, coincided with market jitters over the sustainability of the GNU after the DA and ANC failed to agree on the budget.
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