The JSE all share index breached the 115,000-point mark for the first time in the bourse’s 138-year history as positive sentiment towards SA Inc strengthens.
The exchange has been buoyed this week by the stronger rand, which traded below R17/$ for the first time in well over two years on Thursday morning, amid a growing suspicion that the country may be due for a ratings upgrade.
The move, which might open the door for further upgrades and a flood of new investment, could come as soon as Friday, when S&P Global Ratings releases its latest review on SA’s sovereign credit rating.
The firmer rand comes exactly a week before the next interest rate announcement and could well tip the monetary policy committee’s hand towards a cut. A firmer currency lowers the price of imports, which in turn can have a positive effect on inflation, which the Bank uses as the main factor when deciding on rates.
Wednesday’s medium-term budget policy statement (MTBPS) and finance minister Enoch Godongwana’s announcement of a 3% inflation target have added to an increasingly optimistic outlook for the local economy, even as the Treasury lowered its growth forecast to 1.2% for this year.
While the JSE has had a stellar year, it is worth noting that the rally is largely due to soaring precious metal prices.
Safe-haven demand, fuelled by concern about the US economy’s questionable health and aggressively protectionist trade policies, continues to shore up the share prices of mining majors, which make up half of the JSE’s 10 most valuable companies and more than a third of firms on the top 40 index.
With gold prices 60% higher than at end-December, the resources index has doubled in value this year, while the precious metals and mining index has nearly tripled, its best year on record.
Platinum is also up more than 80% thanks to structural market deficits, while a steady rise in copper prices continues to support base metal giants such as BHP and Anglo American.
The biggest winners this year so far are precious metal heavyweights AngloGold Ashanti and Sibanye-Stillwater, whose globally diversified portfolios have acted as a shield against trade wars and supply chain disruptions.
Outside of mining, other star players include Naspers and its majority-owned Prosus, whose share price has added just shy of 50% this year, largely thanks to consistent revenue growth from Chinese internet subsidiary Tencent.
Investec chief economist Annabel Bishop said a number of factors were aligning for a ratings upgrade, “with projected debt levels lower than before and growth likely to ramp up towards 2% year on year in the medium term, as the domestic freight crisis shows clear evidence of lessening”.
“SA received a positive outlook in November 2024 from S&P,” said Bishop. “Credit rating agencies typically don’t keep positive or negative outlooks indefinitely (usually not more than 18 months), without changing the rating or returning the outlook to stable.”
The all share, the broadest measure of SA’s stock market performance, was up 2.29% at midday, having peaked at a record 115,266 points in morning trading. It closed 1.55% stronger on Wednesday.
Also read:
Ratings upgrade and rate cut likely as SA targets lower inflation
SA’s 3% inflation target sets sights on price stability and investor confidence
READ IN FULL | Enoch Godongwana’s medium-term budget policy statement
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.