JSE sees another quarter of double-digit returns

SOUTH African stocks ended the first quarter strongly, delivering a double-digit return of 12.6 percent – its second consecutive double-digit quarterly return.

In the fourth quarter of last year, it recorded an 11.5 percent gain.

A slew of earnings announcements last month delivered generally better-than-expected results and saw gains for JSE-listed companies.

Insurers were a rare weak spot for March, as earnings results were accompanied by a cautious tone and news of additional provisions against claims related to new waves of Covid19 infections. Diversified mining producers were another weak spot, held back by softening commodity prices. Iron ore fell 6.2 percent month-onmonth (MoM).

MTN was among the best-performing JSE-listed companies, rising 19.5 percent MoM as it discussed plans for a value unlock.

Retailer Shoprite was another star performer for March, up 18 percent MoM, as its earnings release showed the company’s African operations turning profitable and impressive cash generation across the group.

Tight supply in palladium saw the metal rally towards the all-time highs achieved pre-pandemic, up 13 percent MoM and helped to drive JSE-listed platinum miners up 11 percent MoM.

Small- and mid-cap stocks also had a strong month as investors stepped back into smaller companies that have generally been shunned for the past few years.

The South African Reserve Bank (SARB) left rates unchanged in March, as expected, having seen February inflation data come in below expectations at 2.9 percent year-on-year and below the lower band of the SARB’s target range of 3 to 6 percent.

Despite supportive monetary policy and muted inflation expectations, South African government bond yields sold off during the month, tracking global rates higher. South African 10-year government bond yields ended the month 0.5 percent higher at 9.5 percent, causing the JSE All Bond Index to fall by 2.5 percent MoM.

The rand was the best-performing major currency for March, rallying 2.3 percent MoM against a generally strong dollar.