The JSE Securities Exchange powered into the new year on a record high, picking up from where it left off last year. On Tuesday the FTSE/JSE Africa all share index reached 12 784,34 points, the latest in a series of records that have been displaced since October.
Tuesday’s performance took place in a relatively thin trading volume, with turnover at roughly R1,5-billon.
The JSE was one of the top 10 best performing bourses in the world last year, delivering returns of more than 20%.
The market-defying performance is driven by strong commodity prices and robust economic performance underpinned by low inflation, low interest rates and runaway consumer spending.
The JSE’s performance has exhibited heartening peculiarities of being of a relatively broad-based nature and defying the strengthening rand. The top performers are no longer confined to mining giants and peers like Sasol. In the last quarter of last year alone telecom shares MTN and Telkom and bankers such as Absa and Standard Bank took their place alongside Anglo American and BHP Billiton as top performers.
By midweek the JSE had been dragged down by weaker world markets. The JSE has been able to withstand the stronger rand in part because of higher commodity prices.
The rand also maintained its strong levels into the new year. On Thursday afternoon it was trading at R6,03. Its performance, too, is driven largely by com- modity prices, but also by the weakness of the dollar. The South African stock market has a heavy resource bias. Thus the price of gold, platinum, steel and other metals tends to have a major influence.
Investment bank Merrill Lynch forecasts a steady rand for 2005, although the bank has adjusted its year-end forecasts from R7,75 to the dollar to R6,40. Elisabeth Gruie, currency strategist at BNP Paribas in London, was quoted by Reuters as saying that recovery in the dollar can see the rand end the first quarter at R6,33. Gruie notes though that persistent dollar weakness could see the rand end the year at R4,95.