The JSE has been through a remarkable decade. Between 2009 and 2014, the stock market delivered returns after inflation of more than 10% per year, which was meaningfully above its long-term average. In the five years since then, however, the JSE has barely managed to beat inflation at all.
Investors tend to focus on the most recent period because it is what we are currently living through, but if anyone had fallen asleep 10 years ago and woken up today, they should be quite satisfied with the JSE’s point-to-point performance over this period as a whole. Between July 1, 2009 and June 30, 2019 the FTSE/JSE All Share Index (Alsi) is up 13.5% per year. That is around 7.5% ahead of inflation, which is in line with its 80-year average.
That same sleepy investor would probably, however, be quite surprised how the market has changed. Most obviously, they would likely be amazed that Naspers is now nearly 20% of the Alsi, and 23% of the FTSE/JSE Top 40 on its own. Ten years ago, it was only 3.7% of the large cap index.
The company’s share price has risen from R225 to more than R3 500 over this period, and a large part of the index return can be put down to that alone. It has been the single-biggest influence on the JSE over this period.
Its climb is however dwarfed by that of another stock, which was barely on the investment radar back in in 2009.
Capitec’s share price has shot up from R42 in 2009 to around R1 230 today.
Where have all the miners gone?
Ten years ago the market was dominated by commodity producers. In 2009, BHP Billiton was 16.2% of the Top 40, and Anglo American was 13.1%.
Together with Impala Platinum, AngloGold Ashanti, Anglo Platinum, Gold Fields, Harmony Gold, Kumba Iron Ore, African Rainbow Minerals, Exxaro Resources and Lonmin, these mining stocks made up just under 44% of the Top 40. No sector is that dominant in the market today.
Although basic materials producers are still the largest component of the Top 40, they now make up only 25.1% of its market capitalisation.
Today, Impala Platinum is only about a third the size of Capitec. That is quite remarkable when one considers that the bank only entered the Top 40 in 2015.
Changing of the guard
The market has also changed in other ways. Over this period, the JSE experienced the rise and demise of African Bank, followed by the rise and implosion of Steinhoff. Both were companies of significant size.
At its peak, African Bank was around 1% of the Top 40. Steinhoff was one of the 15 largest companies on the JSE.
In total, 15 counters that were in the Top 40 in 2009 are no longer there. The table below shows which stocks have fallen out of the large cap index over this period, and which have come in.
|Change in companies in the Top 40|
|SABMiller||British American Tobacco|
|Kumba Iron Ore||Discovery|
|ArcelorMittal South Africa||Mr Price|
|African Rainbow Minerals||Nepi Rockcastle|
|Pick n Pay Stores||The Foschini Group|
|Liberty Holdings||PSG Group|
Source: FTSE Russell/JSE
The most notable new entrant is British American Tobacco. Although it was unbundled from Remgro and Richemont in 2008, it only qualified for inclusion in the Top 40 in 2011 when the rules regarding inward listings on the JSE were changed.
The investor who went to sleep in 2009 and only woke up this year would probably also be surprised by how far Pick n Pay has slipped from being South Africa’s largest retailer. The supermarket group founded by Raymond Ackerman was the leading retail stock in the country for decades, but it has fallen out of the Top 40 and there are now five other retail stocks in its place, besides Shoprite which had already overtaken it more than a decade ago.
There are also two entirely new counters in the Top 40 – Bidcorp and MultiChoice. Both were unbundled from other companies. Bidcorp came out of Bidvest in 2016, and MultiChoice was split out of Naspers earlier this year.
By the numbers
Overall, however, the number of companies listed on the JSE has fallen. There were 415 stocks on the local bourse in 2009, but only 361 today. That is a 13% drop.
The number of exchange-traded products on the JSE, on the other hand, has boomed. Although the first exchange-traded fund (ETF) was listed in 2000, growth was initially slow. Only 16 local ETFs have 10-year track records.
There are now 78 ETFs and 27 exchange-traded notes (ETNs) listed on the JSE. Their total market capitalisation of R91.3 billion is relatively small – just 0.5% of the exchange’s total market capitalisation – but they have shown fairly consistent growth both in number and size.