ARTICLES

JSE All Time Record High

On Friday last week, the 12th of July 2024, the JSE Overall index closed at 81686 – an all-time record high. Consider the chart:

The chart shows that the Overall index made a low on the 29^th of September 2022 and then a cycle high on the 27th of January 2023. The index made a low in October 2023 (2^nd touch point) and then again in March 2024 (3^rd touch point). Since then, it has been following international markets, and particularly Wall Street, up.

In part, this upward move, especially recently, is a positive response to the formation of the Government of National Unity (GNU) following our very successful and peaceful elections, but the main driving force behind the JSE’s performance is undoubtedly the extraordinary record-breaking run on Wall Street.

The latest inflation data from America shows that both the core and headline consumer price index (CPI) were better than expected with the core number coming in at -0,1%. This is the first time in four years that prices have actually declined. Clearly, the high level of interest rates is bringing inflation down closer to the Federal Reserve Bank’s goal of 2%. Markets now have an 85% expectation that interest rates will begin falling in September this year – and that expectation is driving Wall Street up to a series of new all-time record highs. Consider the chart:

In January of this year we published an article entitled The Great Bull Resumes in which we said, “Our calculations indicate that the S&P could go as high as 6458 on this leg…”

Our view is that the S&P will continue going up for some time now, driven by the profitability expected to come from artificial intelligence (AI) and switch to renewable energy which is gaining momentum world-wide.

The JSE always ends up following Wall Street sooner or later. Many of our largest shares are international companies and listed on other exchanges. For this reason, the systematic drivers of the JSE tend to be developments overseas rather than local issues.

CAPITEC

One of the shares that has been benefiting directly from the shift in international sentiment and the implementation of the GNU is Capitec Bank. On Friday last week Capitec published a trading statement in which it projected that its headline earnings per share (HEPS) would rise by between 25% and 35% in the six months to 31^st August 2024. This is a dramatic improvement and shows that Capitec fully warrants the high rating that it enjoys on the JSE.

We added Capitec to the Winning Shares List (WSL) on 4^th November 2023 at 185496c per share. It closed on Friday last week at 273225c – a gain of 47,29% in 8 months.

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PDSNET ARTICLES

Bubble

Last Friday the S&P500 reached another new all-time record high, closing at 6791 and reaching a new intra-day record high of 6807. This is obviously an exciting time for private investors, but with each new record high the systematic risk of a bear trend or crash increases. Consider the chart:

The PEG Ratio

Since the government of national unity (GNU) came into power in June 2024, there has been a definite improvement in the South African economy. Perhaps the improvement is not as dramatic as some people were expecting, but the progress cannot be denied.

Possibly the best indicator of that is the 28% rise in the JSE Banking index which, before the GNU had

Rare Earth Elements

Investors worldwide had been of the opinion that Trump’s ability to impact markets was on the decline. His erratic, on-again, off again tariff policies had either disappeared or had been mostly discounted into share prices. His attack on the second largest economy in the world, China, seemed to have been largely resolved, and a meeting with

US Shutdown

There has been much in the media recently about the US government shutdown and the fear among investors that it might begin to affect the stock market, depending on how long it lasts.

A shutdown occurs when the US government reaches its budget limit and requires a bill to be passed through both Houses to extend the government’s spending limits.

New Listings

Two new companies, ASP Isotopes and Greencoat Renewables, have recently come to the JSE. Both are developing companies that have recently made losses and have been funding those losses by raising capital and selling assets. They both have substantial “blue sky” potential but also carry substantial investment risk. This is probably truer of ASP

Exponential Growth

The  S&P 500 index is important because all the stock markets around the world tend to follow it. If the S&P is in a bull trend then London, Tokyo and the JSE will also be in a bull trend – and vice versa.

The S&P500 index began 68 years ago on 4 th March 1957 with an initial value of 43,73. It took nearly

The US Jobs Market

International investors who trade on Wall Street are generally negative about any good news from the economy because it tends to make the monetary policy committee (MPC) more hawkish and less likely to reduce interest rates. The opposite is also true. But there comes a point where bad news is so bad that investors begin to fear that the US economy is heading

Jackson Hole

Once a year in late August central bankers and academics congregate in Jackson Hole to discuss the state of the economy and consider the way forward. Traditionally, the Chair of the Federal Reserve Bank (“the Fed”) addresses the meeting and gives direction to its thinking on monetary policy in the US. This year, the comments of Jerome Powell resulted in the

Choppies

Choppies is a supermarket chain which operates in Botswana, Namibia and Zambia. It is listed both on the Johannesburg Stock Exchange (JSE) and on the Botswana Stock Exchange (BSE). Notably, the company has resisted the temptation to re-enter the highly competitive and cut-throat retail market in South Africa, having exited that market in 2020 due to sustained losses. Despite

Gold Resistance

All investments throughout the world can be ranked on a scale from high risk to low risk. As a general rule, in the world of investment, risk and return rise together. In other words, as the risks in an investment increase, so does the return necessary to attract investors.

At the one end of the scale there are very low risk investments