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JSE returns 7,6% to investors in 2014

Total return just shy of 11%.

CAPE TOWN – Overall, 2014 was not exactly a stellar year for investors on the JSE. The FTSE/JSE All Share Index gained just 7.6% over the 12 months.

This is less than 2.0% above inflation, which came in around 6.0% for most of the year. If one looks at the total return of the index, however, which considers dividends reinvested, the gain on the All Share Index was a slightly more comfortable 10.9%.

In US dollar terms, the bourse looked in even poorer shape. Due to the depreciation in the rand, the JSE delivered a negative US dollar return of -2.6%. In comparison, the S&P 500 showed a gain of 11.4%.

The market was really pulled in two directions during the year, with resource stocks sharply down and industrial and financial counters continuing to out-perform. Listed property also delivered strong gains.

The below table shows the performance of the JSE’s major sector indices during the year:

 

2014 JSE Sector Performance to 31 December 2014

Index

1 Year Price Return

1 Year Total Return

FTSE/JSE All Share

7.60%

10.88%

FTSE/JSE Industrial 25

14.45%

17.22%

FTSE/JSE Financial 15

22.73%

27.83%

FTSE/JSE Resources 10

-17.79%

-15.01%

FTSE/JSE SA Listed Property

18.59%

26.64%

Source: Morningstar

The poor performance of mining stocks as well Sasol in the second half of the year ultimately weighed heavily on large cap sector. The Top 40 performed significantly below the mid and small cap sectors over the course of the year.

The below table shows the performance of the three major JSE market cap sectors:

 

2014 JSE Sector Performance to 31 December 2014

Index

1 Year Price Return

1 Year Total Return

FTSE/JSE All Share

7.60%

10.88%

FTSE/JSE Top 40

6.00%

9.17%

FTSE/JSE Mid Cap

15.97%

19.62%

FTSE/JSE Small Cap

15.80%

20.57%

Source: Morningstar

 

It is notable that although the small cap index slightly under-performed the mid-cap index on price, its better dividend yield meant that it realised a higher total return.

The Top 40 was held back by a few of its largest constituents, most notably BHP Billiton, Anglo American, Sasol, Anglo American Platinum and Kumba Iron Ore. The below table shows the drop in the price of these major resource stocks:

 

2014 Performance of JSE’s largest resource stocks to 31 December 2014

Counter

Market Capitalisation

Opening price 02/01/2013

Closing price 31/12/2014

1 Year Price Return

BHP Billiton

R511 billion

R 325.00

R 248.68

-23.48%

Anglo American Plc

R291 billion

R 230.00

R 215.33

-6.38%

Sasol

R262 billion

R 516.00

R 431.01

-16.47%

Anglo American Platinum

R93 billion

R 393.95

R 341.12

-13.41%

Kumba Iron Ore

R78 billion

R 443.45

R 239.90

-46.10%

Source: Bloomberg

Between the start of 2012 and the end of 2013, the big multinational industrial counters more than compensated for the ongoing weakness in resource stocks. They effectively drove the market during that period.

However, this showed some sign of slowing during 2014. Richemont and MTN were effectively flat over the year, while British American Tobacco and SABMiller enjoyed more modest gains than over the previous 24 months. Naspers, however, continued to soar.

 

2014  Performance of JSE’s largest industrial stocks to 31 December 2014

Counter

Market Capitalisation

Opening price 02/01/2013

Closing price 31/12/2014

1 Year Price Return

British American Tobacco

R1.2 trillion

R 561.75

R 632.00

12.51%

SABMiller

R957 billion

R 535.80

R 605.39

12.99%

Naspers

R686 billion

R 1,100.65

R 1,515.12

37.66%

Richemont

R525 billion

R 104.58

R 105.00

0.40%

MTN

R387 billion

R 217.80

R 221.41

1.66%

Source: Bloomberg

The big positive was however the financials sector, where there were good gains almost across the board. Amongst the biggest financial counters, only Old Mutual did not show a double digit gain.

 

2014  Performance of JSE’s largest financial stocks to 31 December 2014

Counter

Market Capitalisation

Opening price 02/01/2013

Closing price 31/12/2014

1 Year Price Return

FirstRand

R277 billion

R 35.79

R 50.57

41.30%

Standard Bank

R230 billion

R 129.40

R 143.48

10.88%

Old Mutual

R162 billion

R 32.82

R 34.70

5.73%

Barclays Africa

R154 billion

R 134.75

R 182.00

35.06%

Sanlam

R144 billion

R 53.20

R 70.00

31.58%

Source: Bloomberg

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