‘6 stocks holding up JSE’
JOHANNESBURG. — Foreign investors are pulling out of the South African market at an alarming rate, but instead of sending the JSE into a decline, the index has maintained its strength primarily due to just two stocks, according to a new analysis by Bloomberg.
The JSE’s benchmark is up 0,6 percent this year, well short of the 16 percent advance in the MSCI Emerging Markets Index, after foreigners dumped a net R77 billion rand of local shares.
However, these numbers could have been much worse if not for media conglomerate Naspers Ltd and luxury retailer Richemont, noted the report.
The share prices of the two JSE heavyweights that have contributed most of the year’s returns, but are not actually determined on the JSE but rather Hong Kong and Zurich, said Shaun le Roux, a money manager at PSG Asset Management speaking to Bloomberg.
Naspers which currently constitutes 17 percent of the 166-member index has gained 28 percent in 2017, primarily because Tencent, of which it owns a third, surged to almost 50 percent in Hong Kong.
In comparison Richemont, the second-largest index member at 8,5 percent, has climbed 18 percent. With its focus on global luxury brands like Baume & Mercier and Montblanc, Richemont is less at risk from the South African economy, noted Le Roux.
However Richemont and Naspers are not the only big players on the JSE. Six companies (Naspers, Richemont, BHP Billiton, Anglo American, British American Tobacco and the MTN Group) account for just over 42 percent of the All-share composition, with the remaining 160 members making up the rest. In comparison to strong contenders Naspers and Richemont, BHP Billiton is currently trading up over the past year (1,36 percent), alongside Anglo American (9,5 percent), while British American Tobacco is currently under-performing at (0,02 percent)
The MTN Group has proven to be the big outlier of the six, posting a -25,18 percent result over the last year and a more concerning -51,25 percent drop over the last 3 years.
According to Le Roux foreign sentiment towards South African equities remains poor and shareholder registers indicate widespread selling by foreign investors of most JSE-listed stocks over the past few months.
However he also noted that this could point to a good investment opportunity for local traders. — BusinessTech.