Investing on the JSE has been a topsy-turvy affair in 2018 and no one would blame you for feeling emotionally drained and unsure of where exactly to put your money. Below we break down the performance of the JSE into its respective sectors to try and find out where the performance (or lack thereof) has been.
Shares can be broken down into three broad sectors on the JSE: resources, industrials or financials. We compare these three sectors to see who outperformed who for the year so far, and also highlight the best and worst performers in each sector.
After the initial euphoria (aptly labelled "Ramaphoria") when Ramaphosa was elected as president, reality has set in and quite severely so. The economic and political obstacles South Africa faces have resurfaced and the difficulty of rectifying them highlighted, with Ramaphosa facing increasing scrutiny in his methods while trying to attract foreign investment. The rand has weakened 14.49% from R12.37/$ to R14.17/$ since the beginning of the year, and has looked more and more fragile lately, peaking above R15/$ to the dollar not too long ago.
The resources sector (represented by the Resources 10 Index) has been the best performer by a country mile, with the weakening rand lending a helping hand. If you’ve had no exposure to this sector, your portfolio would’ve struggled. Although these shares can be volatile, it is always a good idea to diversify and add some exposure, even if you are more risk averse.
Best performer: Mondi Plc (MNP)
Worst performer: Gold Fields (GFI)
The industrial sector (represented by the Industrial 25 index) has struggled overall. Note from Table 1 above that, on average, more than half of their revenue is earned offshore, which should be favourable with a weakening rand, yet they still found the going tough.
Best performer: Netcare (NTC)
Worst performer: Tiger Brands (TBS)
The financial sector (represented by the Financial 15 index) has been the worst performer, also registering negative returns. The weak rand has been the main contributing factor. Interesting to note though is how well the index did up to the end of March, whereafter it has struggled.
Best performer: Nedbank (NED)
Worst performer: Nepi Rockastle (NRP)
Overall JSE performance
Overall, the JSE All Share index is slightly negative for the year so far. There is uncertainty about where global markets are heading, along with the uncertainty of our local market. But you can always structure your portfolio in order to diversify your risk and share in the performance of the sectors (and shares) that are able to outperform the market. And never forget about the power of dividends and the certainty they provide, especially valuable during these kind of markets. These are some of the principles we use when constructing our Managed Portfolios in trying to maximise long-term value for investors.
Contact us today to find out more about our Managed Portfolios.
Stephan is a portfolio manager and full-time trader. He developed his passion for the markets while working in the Stockbroking division of Standard Bank and is especially passionate about CFD trading. Stephan studied at the University of Stellenbosch and completed a BComm Honours (Business Management) with a focus in Portfolio Management and Bonds. He has also passed the JSE Equity Trader’s Exam, RE5 (Representative) and RE1 (Key individual) Exams as well as the Registered Persons Exams (RPEs) in order to give advice on equities.