How bad has the JSE been?

We have been through a bad patch in local equities. Multiple reasons are offered why and I would like to focus on: all emerging markets have struggled! To be honest only the US market and their IT stocks have performed well!

I asked Peter Little, fund manager at Anchor Capital, to assist with comparison of the JSE returns over the last 10 years. The table below compares:

  • the JSE Top 40 (the biggest 40 companies on the JSE by value);
  • MSCI Emerging Markets (ex-China);
  • MSCI Emerging Markets that includes China.

It’s clear that the JSE has been lagging emerging markets with or without China over the past 5 years.

But surely we have kept up with some of the other emerging market players?

Peter comments that it would be lovely if it was just a China thing and we were matching the rest of the emerging markets peers, but the reality is we’ve been struggling the last 3/5-yrs, especially at the MSCI Emerging Markets level where Naspers isn’t as influential as it is in the Top 40. Here’s the MSCI Emerging Markets total returns (ZAR p.a.) for the highest weighted countries over the last 3- and 5yrs:

The MSCI Emerging Markets index is heavily skewed to Asia (China, Korea, Taiwan & Indian = 64%), but even if we compare ourselves to Brazil & Russia it looks pretty mediocre.

Peter’s analyses shoots the “all emerging markets are struggling” defense out of the water.