SA’s market surge adds R5-trillion in value

Structural reforms have seen foreign investors surge back into local equities this year, with data from the JSE showing almost R5-trillion added to total market capitalisation in the year to date, bucking the trend of the past few years.

The FTSE/JSE top 40 has surged 55% in dollar terms in the year to date, outperforming the MSCI emerging markets index by 30% and developed world indices by 20%, as positive sentiment towards SA assets returns.

The rand has also strengthened substantially this year while bond yields have fallen. Bond yields fall as prices rise. SA has attracted more than R129bn in bond net inflows this year, and equity markets have re-rated strongly.

The all share index, the broadest measure of SA stock market performance, closed Friday’s trading session at just under 112,000 points and is likely to receive further support on Monday as news of SA’s credit rating upgrade by S&P filters through the market.

The momentum is increasingly broad-based and is converting into a strong listings and deals pipeline.

The Reserve Bank’s latest quarterly bulletin shows that the rally in SA equities this year has translated into an increase in household wealth, with many working and business people’s pensions and investments exposed to the stock market.

“Households’ net wealth increased further in the second quarter of 2025 as the market value of total assets increased more than that of total liabilities,” the bulletin reads.

“The increase in the value of assets resulted primarily from higher share prices as the all share index increased notably in tandem with international share price indices, while the increase in the value of housing stock was supported by the continued acceleration in domestic property price growth.”

JSE CEO Leila Fourie said investors have been ahead of the rating agencies, pricing in fiscal repair, institutional strengthening and the early results of structural reforms.

“As we prepare to host the G20 and B20 meetings, the upgrade sends a positive signal of progress and the potential for further upgrades as the country builds momentum in fiscal credibility, growth and strong governance reform,” Fourie said.

“This progress indicates that the reform path is credible, that institutions are strengthening and that the macroeconomic framework is sound. This point of inflection supports SA’s position at a moment when the world has its eyes focused on our country.”

Fourie, who is stepping down from the role early next year, weighed in on the move by the National Treasury to lower the inflation target to 3%, saying this aligns the country with global practice and should, over time, lower inflation expectations, create room for lower interest rates and reduce borrowing costs across the economy.

“The partnership between financial sector leaders and the Treasury is advancing reforms that make SA more competitive. Recent fiscal consolidation strengthens the conditions for these reforms to take hold. The JSE has been proud to help co-ordinate this effort and to lead the private sector drive to support the government’s reform agenda,” Fourie said.

Sim Tshabalala, the group CEO of Standard Bank, said the lower inflation target, now formally set by the Treasury, is — first — a sign of resurgent institutional strength at the National Treasury and the Reserve Bank.

He told Business Day that the move will bring SA inflation and inflation expectations more in line with other major emerging and developed markets, reducing uncertainty for international investors and therefore encouraging them to invest more in the country.

“It will reduce the negative distributional impacts of inflation [inflation tends to have a worse impact on poorer and older people than on the more affluent]. It will therefore keep more purchasing power in the hands of the majority of South Africans, improving both welfare and aggregate demand and therefore growth,” Tshabalala said.

“Indeed, the cumulative effect of lower inflation, lower interest rates, higher confidence and more borrowing by households and businesses will be to accelerate growth, create jobs and improve the lives of all South Africans.”