South Africa's Johannesburg Stock Exchange (JSE) continued its bullish momentum this week, reaching record highs on the back of strong performances from key tech counters and buoyant investor sentiment.
Joining us for a closer look at the markets, Odwa Magwentshu from Momentum Securities highlighted the drivers behind the surge, citing standout performances from NASPERS and Prosus. “The rally was mainly supported by Tencent’s impressive earnings in China,” Magwentshu said. “As NASPERS and Prosus are heavily exposed to Tencent, we saw nearly 3% gains in those stocks alone.”
Investor optimism was further buoyed by local corporate resilience and improving sentiment indicators. “We’re still seeing positive company news, which shows South African corporates are holding up well,” he added. “Business confidence data was also released, painting a stronger economic picture.”
Rand Rally Gains Momentum
The rand has continued to strengthen, trading around R17.50 to the US dollar. According to Magwentshu, there’s room for further appreciation. “It’s very plausible to see it strengthen even more. The weakness in the dollar, along with easing tensions between the US and China, are favouring emerging markets like South Africa.”
Improved investor sentiment has translated into renewed appetite for rand-denominated assets, a trend that could continue if global conditions remain favourable.
Oil Prices Under Pressure
On the commodities front, Brent crude remains subdued at around $65 a barrel. “The outlook suggests more downside,” said Magwentshu. “OPEC has announced increased production, and with global GDP growth slowing and ongoing trade concerns.”
Corporate Updates: Capitec and Blue Label Telecoms Shine
In company news, Capitec Bank issued a strong trading statement, expecting a significant increase in interim earnings. “We’re seeing solid growth in both net interest income and business income,” Magwentshu explained. “Importantly, Capitec has managed to stabilize its capital loss ratio, indicating that its client base is in relatively good financial health.”
Meanwhile, Blue Label Telecoms announced a major restructuring involving the unbundling of Cell C, an initiative expected to unlock considerable value. “They’re anticipating a R5 billion increase in valuation,” said Magwentshu. “This mirrors trends we've seen with companies like Pick n Pay and Transaction Capital, where similar unbundling strategies created shareholder value.”
The market responded favourably, with Blue Label’s share price surging on the news.
Outlook
With strong corporate earnings, a resilient currency, and potential relief from oil prices, South African markets appear to be on solid footing heading into the final quarter of the year. However, analysts caution that global uncertainties, particularly surrounding US interest rates and geopolitical tensions remain key risks to monitor.