Investors had high hopes for the JSE in 2020. After a lacklustre five years, ending December 2019, when the JSE managed subpar returns of 6% and barely beat inflation, it was hoped that 2020 would be the year of recovery. Instead, it’s been a year of wild rides beginning in March, when bourses around the world crashed on the news that Covid-19 was a pandemic.
By 19 March, the JSE was trading 30% lower than it was in January and despite some gains, by early December the FTSE/JSE Capped Swix Index was standing at a miserable -1%. At the same time, global indices shot the lights out, driven by a handful of technology stocks whose share prices exploded.
But it looks like the stars may finally be aligning for the local equity market, with the global stimulus finding its way to local shares as global investors become more comfortable investing in riskier emerging-market assets.
In addition, the interest rate environment is expected to remain benign – encouraging investment and growth, while local profits are expected to recover in 2021.
And if South Africa’s fiscal position remains relatively stable and GDP growth improves, then even better for the JSE,…