The Wall Street bull is seen in the financial district in New York, the US. Picture: REUTERS
The Wall Street bull is seen in the financial district in New York, the US. Picture: REUTERS

The US stock market has recorded its longest bull run since World War 2. In stark contrast, the JSE has lagged significantly, as issues of poor governance under former president Jacob Zuma’s administration and the resulting economic slowdown hampered returns.

The US stock market marked 3,453 consecutive days on Wednesday without suffering a drop of 20%, be it on a day, a week, a month, a year or a moving average. The bull market — driven by huge global liquidity injections and low interest rates after the demise of Lehmann Brothers in September 2008 — started on March9 2009.

Since then it has recorded returns of 574.44% in rand terms. Over the same period, the JSE’s all share index (Alsi) has delivered a total return, which includes share price movements and dividend payments, of 321.81% in rand terms.

In dollar terms, the picture becomes even bleaker for the local market, with the rand having depreciated sharply over the past decade. Since the start of the bull run, the Alsi was up 214.19% in dollar terms, while the Dow returned 402.33%.

Against this background, it would have been much more lucrative for local investors to invest their savings in the US, rather than in the local market. This especially holds true over the past four years, a period of marked deterioration in the JSE.


While the growth in the Alsi and the Dow until 2014 was largely in tandem, a significant divergence has been noticeable since. Over the past four years, the Alsi is up 28% in rand terms, while the Dow rocketed nearly fivefold with 122.6% growth over the period. In dollar terms, the Alsi lost 3.7% over the past four years, with the Dow gaining 67.4%.

"It is [a] well-established fact that the JSE has underperformed US markets over a long period," said BP Bernstein Stockbrokers portfolio manager Vasilis Girasis.

Although the JSE has its own particular backdrop to explain the weak performance, it is broadly also an emerging-market story, he said. The MSCI emerging markets index has also lagged US markets.

"US markets still appear strong, but waning volumes could be the first sign of a pullback," he said.

However, he expects the rand to remain weak over time, which could boost platinum and gold stocks over the next six months if commodity prices rise on a weaker dollar. The JSE gained on Wednesday, with the Alsi closing 1.64% higher.

The dismal returns on the JSE would have been much worse were it not for Naspers, which now accounts for nearly 13% of the index’s market capitalisation. Over the past four years, the media and internet group returned 81.53% in dollar terms, mostly thanks to its exposure to Chinese internet company Tencent, of which it owns about a third.

Its return in rand over the four years amount to 143.44%, far outpacing the Alsi’s 25.97%. Since the start of the bull run, Naspers has returned a spectacular 2,493.39% in rand, also far outpacing the Dow Jones.

Old Mutual Multi-Managers analyst Izak Odendaal said the JSE has recently been affected more by Chinese video games, referring to pressure on Tencent, than turmoil in Turkey.

"Storms pass, but in their wake often provide opportunities when currencies, asset classes or securities are oversold," he said.

Stanlib retail investment director Paul Hansen said the Alsi appeared to be breaking its downtrend since the peak in global and local markets in late January. "Historically, doom and gloom is a good time to buy."