neW dynaMIC aSSet ManaGer IS reQUIred
THE JSE’S ALL-SHARE INDEX will never – yes, that’s risky to say, so let’s make it not within the next 20 years – recover to the level of 32 000 without the share prices of its heavyweights at least doubling or preferably rising 200% to 300% from current levels. That can only happen if we again have a runaway demand for commodities, as was the case until six months ago. That runaway demand was in turn the result of the best five-year growth period ever in the world economy. That was an unbelievably sweet spot.
New money and new kinds of shares will fare very well on the JSE somewhere in the next couple of years. However, the favourite shares – selected elsewhere in this report by asset managers – are too small to make up even over the next decade or two the fall of more than R1,5 trillion in the total market value of the JSE caused by the top five alone.
In Japan, even after two decades, the Nikkei hasn’t come anywhere near its previous peak. In SA, the same will happen with the all-share index if SA’s resources shares don’t start rising sharply again, as they did five years ago.
In brief, that means balanced portfolios that traditionally rely on the large cap top shares will not soon, if ever, reach their record values of six months ago. A new dynamic asset manager – away from the old buy-and-hold approach – is required.