The record levels at which stock markets are trading are something of a misnomer as the global economic consensus is still pretty gloomy for 2023 as a whole. Yet, the equity markets are apparently responding to the possibility of less intense bad news than they expected previously.  

SA’s equity markets have benefited in a number of ways. First, the easing of Covid restrictions in China has opened up the possibility that SA’s influential mining sector might continue to reap the benefits of Chinese and Asian expansion.  

The Chinese turnaround has also boosted one of SA’s largest companies, Naspers, which is strongly linked to China’s Tencent. 

Meanwhile, markets in the US have been boosted by indications that inflationary forces might be receding, providing more fuel to SA’s equity markets.  

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There may be another effect too: the start of the new year. Januaries are typically good for equity markets. The effect is not large — perhaps a percentage point — and it’s possible it has something to do with tax planning rather than new year optimism.  

Whatever the case, the JSE Top 40 Index — containing the biggest companies on the JSE — closed at 72,223, up 2% on Friday’s close, and beating the previous record in March last year of 71,058. The All Share Index didn’t rise by quite so much, but still entered record territory, closing at 78,343, a head higher than its previous record of 77,536, also recorded in March last year. 

The increase from the beginning of the year has been stellar for these indexes, which rose by more than 5% in just a week. However, this is a little deceptive: although SA’s equity markets did hit highs last year, overall, the markets ended 2022 roughly where they started. 

Read more in Daily Maverick: “JSE starts 2023 where it started 2022 in rand terms, uncertain times ahead”

However, over the longer term, the JSE has tended to treat investors well, doubling over the past decade, despite a long period between 2014 and 2020 where not much happened. The strong start to the year might well provide some impetus for future growth. DM/BM