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Why is the JSE rising when the economy is in tatters?

Dear Investor

I thought it an opportune time to comment on what I find, at first glance, a most confusing situation, namely the surge in the value of the All Share index on the JSE when times are so hard in South Africa.

How can investors perceive our listed companies as being under-valued when we look as though there is a long dark tunnel to traverse before any light will become visible, hopefully, in some years’ time….

If one drills down a little, you realise that just a few giant stocks, Naspers, Anglos, Sappi and the like make up most of the trade on the JSE. 

The rest of the top 40 earn most of their revenue in hard currencies.

The other 150 or so stocks make up a very small % of the value traded on the JSE.

Naspers has surged due to the stratospheric rise in the price of Tencent, a Chinese online gaming & IT company which owns the whatsapp of China and other dominant brands there.

One realizes then how shallow the foundations of this newly found confidence is. 


Beware, the economy as a whole is not looking attractive at all.  It is rather the effect of positive global sentiment towards Tencent and our few large, Rand hedged  multi-nationals that is pushing up their share prices.  It is not a deep-seated bull market.  


Cautious, balanced portfolios with good overseas elements are going to get us through this mess, so don’t become careless with new money.