China and the dirty little secret of South African equities

5 charts on Resources, Naspers and the returns of the JSE All Share Index

It’s been a torrid 2022 so far. Global markets are over 20% off their highs in January, inflation is surging and Central Banks are tightening. The specter of recession is looming.

South Africa’s JSE has experienced some respite from this, through higher resource prices and better terms of trade. But the relatively better performance of SA equities disguises a dirty little secret: the lion’s share of the JSE’s performance comes from exposure to one country, China, through resource stocks and Naspers. Without these two factors, South Africa’s equity performance over the past decade would have been almost 80 percentage points lower than the JSE All Share’s.

The five charts below tell the story.

First up are the returns the JSE All Share Index has delivered over 10 years versus the MSCI All Country World Index (ACWI). The chart shows that global stocks have trounced the JSE over 10 years, delivering 17.8% per annum vs the 11.6% per annum of the JSE, both in ZAR.

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