BUSINESS MAVERICK ANALYSIS
The JSE’s poor performance over five years
How badly has the JSE performed? Over the past year, it has not done well. However, it’s sometimes said that one should buy and hold a portfolio of blue chips for at least five years to ensure a reasonable return.
Disclosure: Reg Rumney holds shares directly in Old Mutual, Nedbank, Quilter plc and indirectly in ETFs. This article should not be construed in way or form as financial advice.
The bad news is if you held for the past five years many of the top shares that are now in the Top 40 you would have lost money.
| TABLE 1 – A MIXED BAG – TOP 10 JSE COMPANIES BY MARKET CAPITALISATION | ||||
| Share | Five- year performance | Market capitalisation | Percentage of the Top 40 market cap | |
| 1 | AB INBEV | -40,5% | 2 035 903 571 110 | 18,3% |
| 2 | NASPERS-N | 173,7% | 1 370 519 444 497 | 12,4% |
| 3 | BATS | -12,3% | 1 338 623 835 986 | 12,1% |
| 4 | BHP | -1,6% | 699 792 748 169 | 6,3% |
| 5 | GLENCORE | -17,3% | 696 345 191 151 | 6,3% |
| 6 | RICHEMONT | -2,2% | 562 716 000 000 | 5,1% |
| 7 | ANGLO | 32,1% | 498 421 060 099 | 4,5% |
| 8 | FIRSTRAND | 62,3% | 360 690 078 464 | 3,3% |
| 9 | STANBANK | 35,9% | 312 295 548 861 | 2,8% |
| 10 | SASOL | -40,3% | 222 451 075 943 | 2,0% |
A snapshot of the Top 40 shows that over five years until 28 May, 23 companies had produced positive returns – before adjusting for inflation of about 27%.
Of those, only a mix of financial services and resources companies, with one investment holding company, Bidvest; one retailer, Clicks; and one paper producer, Mondi, made any real money. Kumba, Anglo, South32 and Amplats are miners. Standard Bank, RMBH, FirstRand, PSG and Capitec are all in financial services. Only one retailer makes the cut, Clicks.
| TABLE 2 – TOP 40 POSITIVE RETURNS | |||
| SHARE | 5 year | MARKET CAP – Rands | |
| 1 | CAPITEC | 476,6% | 148 342 491 834 |
| 2 | CLICKS | 197,2% | 49 387 003 245 |
| 3 | NASPERS-N | 173,7% | 1 370 519 444 497 |
| 4 | BIDVEST | 138,4% | 66 402 947 800 |
| 5 | PSG | 137,1% | 55 459 158 116 |
| 6 | SOUTH32 | 88,9% | 171 142 103 498 |
| 7 | MONDIPLC | 63,2% | 113 826 287 510 |
| 8 | FIRSTRAND | 62,3% | 360 690 078 464 |
| 9 | RMBH | 53,6% | 111 552 788 286 |
| 10 | AMPLATS | 40,2% | 176 903 226 759 |
| 11 | STANBANK | 35,9% | 312 295 548 861 |
| 12 | ANGLO | 32,1% | 498 421 060 099 |
| 13 | KUMBA | 28,7% | 145 705 252 918 |
| 14 | SANLAM | 23,7% | 172 141 612 933 |
| 15 | MC GROUP | 17,4% | 54 635 264 766 |
| 16 | EXXARO | 16,4% | 57 841 464 082 |
| 17 | DISCOVERY | 12,5% | 92 029 044 893 |
| 18 | MRPRICE | 11,4% | 47 008 220 755 |
| 19 | ASSORE | 10,1% | 53 648 177 960 |
| 20 | NEDBANK | 9,4% | 123 642 067 080 |
| 21 | ABSA | 3,3% | 136 623 499 428 |
| 22 | RMIH | 2,7% | 49 691 844 059 |
| 23 | ANGGOLD | 2,4% | 68 211 803 707 |
Some of the Top 40 have been massively disappointing. MTN tops the list.
| TABLE 3 – POOR PERFORMERS | |||
| MARKET CAP – Rands | |||
| 1 | MTN GROUP | -55,80% | 187 484 840 921 |
| 2 | AB INBEV | -40,53% | 2 035 903 571 110 |
| 3 | SASOL | -40,33% | 222 451 075 943 |
| 4 | REMGRO | -19,01% | 94 290 594 137 |
| 5 | GLENCORE | -17,25% | 696 345 191 151 |
| 6 | BATS | -12,31% | 1 338 623 835 986 |
| 7 | PEPKORH | -12,27% | 61 444 500 000 |
| 8 | VODACOM | -9,12% | 213 400 943 067 |
| 9 | REDEFINE | -8,92% | 50 047 141 952 |
| 10 | INVPLC | -6,59% | 57 782 487 784 |
| 11 | NEPIROCK | -6,05% | 68 250 230 336 |
| 12 | BIDCORP | -3,45% | 98 441 136 222 |
| 13 | RICHEMONT | -2,24% | 562 716 000 000 |
| 14 | OMUTUAL | -2,02% | 105 265 629 962 |
| 15 | BHP | -1,63% | 699 792 748 169 |
| 16 | GROWPNT | -1,21% | 70 352 836 900 |
| 17 | SHOPRIT | -0,58% | 96 997 254 483 |
[Where five-year performance is not available, the longest period available has been used, eg three years]
So what of the future?
PSG Wealth Old Oak portfolio manager Schalk Louw is characteristically sanguine. He notes that comparisons between the JSE’s performance and other stock markets such as the New York Stock Exchange, which has done a lot better than the JSE for a while now, should be done over the long term.
It has been tough doing business in South Africa for the past five years, he admits. In 2012, South Africa moved out of recession and money was flowing back into emerging markets, but the political environment soured, he says. The currency came under pressure, and so did listed companies.
Globally, uncertainty persists. The Trump trade war has affected Chinese internet companies, for example. South Africa did have a bad year, but so did other emerging economies. There is turmoil all over the world, especially in emerging countries, he says. “The US market has been boosted by artificial money, and somewhere along the line that will stop.” Indeed, at the time of writing, the Financial Times reports that analysts believe US stocks are looking increasingly expensive compared to the rest of the world.
This may be the time to buy, selectively, shares on the JSE but the adage of “time in the market is better than timing the market” surely holds true for most investors. Five years is the minimum, but clearly, that is not always long enough. DM
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