‘Lion’s share of JSE returns comes from exposure to China, partly via Naspers’

Date:

‘Lion’s share of JSE returns comes from exposure to China, partly via Naspers’

The Johannesburg Stock Exchange. Image: The JSE Group Facebook page

| Pieter Hundersmarck (Fund Manager, Flagship Asset Management) on listed SA businesses’ dependence on China – on The Money Show

  • China
  • The Money Show
  • Bruce Whitfield
  • JSE
  • Naspers
  • Equities
  • Tencent
  • Business Live
  • Global markets
  • Pieter Hundersmarck
  • BusinessLIVE
  • SA equities

Global markets are experiencing extreme volatility and investors are nervous.

However the Johannesburg Stock Exchange (JSE) has experienced some respite through higher resource prices and better terms of trade notes Pieter Hundersmarck (Fund Manager at Flagship Asset Management).

The relatively better performance of SA equities disguises a dirty little secret though, writes Hundersmarck in an article for BusinessLIVE headlined China and the dirty little secret of SA equities.

… the lion’s share of the JSE’s performance comes from exposure to one country, China, through resource stocks and Naspers.

Pieter Hundersmarck, Fund Manager – Flagship Asset Management

Without these two factors SA’s equity performance over the past decade would have been almost 80 percentage points lower than that of the JSE all share.

Pieter Hundersmarck, Fund Manager – Flagship Asset Management

© piren/123rf.com

Bruce Whitifield interviews Hundersmarck on The Money Show.

What we found quite interesting in this environment is that the returns on the JSE have made a really great comeback over the past two years and really rewarded investors quite well… but it’s useful to zoom out and look where those returns are coming from…

Pieter Hundersmarck, Fund Manager – Flagship Asset Management

… although we know that Naspers has its biggest asset in China and we know that resources are typically driven by China, I don’t think we actually realise exactly how much of our exchange really is dependent on the returns of one country…

Pieter Hundersmarck, Fund Manager – Flagship Asset Management

If you think of asset allocation as an investor… you should really be careful about putting all your eggs into that one Chinese basket, so to speak.

Pieter Hundersmarck, Fund Manager – Flagship Asset Management

Hundersmarck emphasizes that he’s not saying you can’t make money off the JSE, but that you need to understand where your returns are coming from.

If you zoom out and look at the constituents the JSE really relies on, you understand that 40-50% of all the commodities that are consumed around the world are consumed by one buyer and that’s China.

Pieter Hundersmarck, Fund Manager – Flagship Asset Management

Then if you look at the main asset of the largest company on our exchange and it’s in China… if you take away away Naspers and you take away resources, you end up with a mid-single digit return over the past ten years.

Pieter Hundersmarck, Fund Manager – Flagship Asset Management

The lesson here, he says, is to really have a view on China if you’re going to invest on the JSE.

Listen to the full interview in the audio clip below (skip to 2:30):

This article first appeared on CapeTalk : ‘Lion’s share of JSE returns comes from exposure to China, partly via Naspers’

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Subscribe

Popular

More like this
Related

Building sector confidence ticks up despite overall decline for Q2, index finds

Building sector confidence ticks up despite overall decline for Q2, index finds Building confidence jumped from 25 to 46 in the second quarter of the year. Picture: Pexels.com Rand Merchant Bank Bureau for Economic Research RMB/BER Business Confidence Index Email Print Tweet Share Theto Mahlakoana | 66 days ago JOHANNESBURG - Rand Merchant Bank and the Bureau

Deregulation of fuel industry not the answer – Fuel Retailers Association

Deregulation of fuel industry not the answer - Fuel Retailers Association The local fuel industry and consumers are bearing the brunt of limited fuel stocks due to the war in Ukraine and while government’s stepped in to cushion consumers through the fuel levy relief, it has warned this is an unsustainable intervention. Picture: © zhudifeng/123rf.com

Nersa boosts renewable energy, approving 16 new projects in 19 days

Nersa boosts renewable energy, approving 16 new projects in 19 days John Maytham speaks to UCT's Hilton Trollip to discuss the National Energy Regulator of South Africa greenlighting new projects. © vencavolrab78/123rf.com Eskom Nersa Renewable energy Email Print Tweet Share Tyler  Layman | 67 days ago Nersa has given the go-ahead for 16 renewable energy projects.

EFF rejects Ismail Momoniat’s appointment as acting DG at Treasury

EFF rejects Ismail Momoniat's appointment as acting DG at Treasury Momoniat's appointment was announced on Wednesday by Finance Minister Enoch Godongwana. FILE: Acting Treasury Director-General Ismail Momoniat. Picture: @TreasuryRSA/Twitter Economic Freedom Fighters Ismail Momoniat Email Print Tweet Share Veronica Mokhoali | 67 days ago JOHANNESBURG - The Economic Freedom Fighters (EFF) has rejected the appointment of Ismail