Making sense of a JSE moving sideways
The JSE has largely moved sideways in recent times. What are the conditions that will put it back on an upward trajectory?
The recent performance of the JSE will have disappointed many South African shareholders. Since 1995, the JSE All Share index has had its downs, but long-term shareholders have been more than compensated for those. Over the same period, average annual returns, calculated monthly, have been 12.9% compared with average headline inflation of 6.2%. In contrast, between January 2016 and May 2017, the share market moved little in either direction. The worst month in this period was February 2016, with negative annual returns of 4.4%, and the best was the close to 10% in January this year. A different picture is presented when the JSE All Share index is converted into US dollars: the index (excluding dividends) is up 24% since January 2016, a gain that compares reasonably well with that of the emerging-market benchmark, the MSCI EM index, which is up 28%, and the 19% achieved by the S&P 500. In dollars, the JSE has over the past two years sustained its close correlation with the EM index, ...
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