{"id":832107,"date":"2025-07-18T14:00:00","date_gmt":"2025-07-18T12:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=832107"},"modified":"2025-07-18T14:05:18","modified_gmt":"2025-07-18T12:05:18","slug":"south-african-stocks-are-shooting-the-lights-out","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/832107\/south-african-stocks-are-shooting-the-lights-out\/","title":{"rendered":"South African stocks are shooting the lights out"},"content":{"rendered":"\n

The JSE All Share has outperformed the S&P 500 in dollar terms over the last five years, with the local bourse benefiting from the relative strength of the rand and a strong investment case for local stocks. <\/p>\n\n\n\n

South Africa\u2019s equity market has continued to surprise on the upside in 2025 despite the economic uncertainty caused by the US\u2019s tariff regime. <\/p>\n\n\n\n

In his \u201cLiberation Day\u201d rally in April, US President Donald Trump announced that South African goods would receive tariffs of 30%. <\/p>\n\n\n\n

Although the methodology used to reach the figure has been questioned, Trump has since doubled down on it, setting a start date for the tariffs to take effect on 1 August 2025.\u00a0<\/p>\n\n\n\n

Despite the uncertainty caused by the tariffs and threats around them, Nicholas De Clercq, Quantitative Analyst at Prescient Investment Management, said South Africa\u2019s bourse has delivered exceptional returns. <\/p>\n\n\n\n

The South African equity market reached an all-time high this year and has returned 19% since the Trump tariff turmoil began.\u00a0It has also weathered ongoing conflicts and oil price concerns.<\/p>\n\n\n\n

\u201cCombined with the relative strengthening of the rand to the dollar, this has allowed the JSE All Share index to outperform the S&P 500 over the last 5 years in dollar returns<\/strong>,\u201d said De Clercq. <\/p>\n\n\n\n

\u201cThis outcome is particularly striking considering the strong US equity exceptionalism narrative and the global shift towards dollar-based assets over the past decade.\u201d <\/p>\n\n\n\n

He noted that the performance underscores that the JSE All Share Index has been a surprisingly competitive investment for global and local investors. <\/p>\n\n\n\n

Although local performance has been strong, foreign investors have remained persistent net sellers of local equities, with nearly R150 billion in net outflows since the start of the year.<\/p>\n\n\n\n

The trend shows that the primary beneficiaries of the market\u2019s strong performance have been local and foreign investors, who have chosen to stay, rather than new foreign capital inflows. <\/p>\n\n\n\n

A significant reason for the strong year-to-date performance has been the basic materials sector, especially gold miners, who have benefited from the 28% increase in the gold price this year. <\/p>\n\n\n\n

Thus, the basic materials sector accounts for roughly 21% of the All Share Index, only slightly behind the financial sector\u2019s 25% weighting.\u00a0<\/p>\n\n\n\n

The telecommunications and technology sectors have also delivered substantial gains, adding to the market\u2019s broad-based rally.<\/p>\n\n\n

\n
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Total Return Index (Source: Prescient Investment Management) <\/figcaption><\/figure><\/div>\n\n\n

What the tariffs mean for South Africa<\/h2>\n\n\n\n

De Clercq said that investors will need to keep a close eye on the 1 August deadline, as this presents a new potential wave of uncertainty for markets. <\/p>\n\n\n\n

That said, investors can take some comfort in knowing that while tariffs present a once-off upward shock to price levels, they are unlikely to impact long-term inflation expectations.  <\/p>\n\n\n\n

\u201cLong-term inflation expectations are a key driver of forward returns for all asset classes, including bonds and equities.\u201d<\/p>\n\n\n\n

\u201cThis component of the forward returns should therefore remain largely unchanged by tariffs even if they do come into effect.\u201d <\/p>\n\n\n\n

Old Mutual Chief Economist Johann Els<\/a> also believes South Africa\u2019s economy should improve shortly despite the US tariffs. <\/p>\n\n\n\n

He said that the US economy will likely enter recessionary conditions this year, but key trading partners China and the Eurozone will see strong growth, with the former set for roughly 5% GDP growth. <\/p>\n\n\n\n

Free trade will likely continue worldwide outside the US, as consumers continue to demand cheaper prices.\u00a0<\/p>\n\n\n\n

South Africa\u2019s exports to the USA also account for a relatively small 8%, which is unlikely to drop to 0% overnight, with several exemptions also expected. <\/p>\n\n\n\n

Els said that the nation\u2019s GDP should improve from the average of 1.1% over the last 15 years to around 2.5% to 3.0% in the medium term.<\/p>\n\n\n\n

He believes that stronger consumer spending will drive the increase in GDP, and the nation will also see minimal inflation and a weaker rand in the coming years.<\/p>\n","protected":false},"excerpt":{"rendered":"

The JSE All Share continues to surprise on the upside despite the heightened global uncertainty. <\/p>\n","protected":false},"author":95,"featured_media":812752,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[1110,23164],"class_list":["post-832107","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-old-mutual","tag-prescient"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/832107","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=832107"}],"version-history":[{"count":10,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/832107\/revisions"}],"predecessor-version":[{"id":832129,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/832107\/revisions\/832129"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/812752"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=832107"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=832107"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=832107"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}