Despite a tepid GDP growth, the SA Business Cycle continues with a 11th month of expansion. The expansion trajectory is as shallow as was the 36-month business cycle recession, which was incidentally the 3rd longest on record since 1960.
If we zoom in on the expansion (right hand pane below) we see that the pace of recovery seems to be accelerating, hardly missing a beat from the Gordhan dismissal in March/April. This was unexpected.
With Naspers virtually dominating the JSE movements these days (want to see which way the JSE is going? Just look at Tencent price move the prior day!) together with other large-cap rand hedges, one has to wonder when local counters on the JSE exposed to the local economy are likely to see a pickup. If trends from the last economic recovery are anything to go by you should see outsized performance in the Auto(J335) , Personal Goods (J376) and Household Goods (J372) sectors, but astute stock-picking in these sectors will also play a large part.
The JSE is progressing nicely according to the business cycle recovery plan, following the average interest rate easing cycle almost to the tee as shown below from our article "JSE ALSI Comes Out To Play" a few days ago.
(Click image to enlarge)
Dwaine van Vuuren
RecessionAlert, Sharenet Analytics
Dwaine van Vuuren is a full-time trader, global investor and stock-market researcher. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT.com (US based) and PowerStocks Research (now Sharenet Analytics) into companies used by hundreds of hedge funds, brokerage firms, financial advisers and private investors around the world. An enthusiastic educator, he will have you trading and investing with confidence & discipline.