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November Local Commentary: The JSE benefits from a substantial shift in investor sentiment

The South African (SA) stock market benefitted from a substantial shift in investor sentiment in November (FTSE/JSE Capped SWIX Index +8.3% MoM), recouping most of the losses incurred in the three months leading up to November. Investment conglomerates Naspers and Prosus were among the biggest winners on the JSE last month (+19% MoM in aggregate), dragged higher by the performance of their largest investment, Chinese tech conglomerate Tencent (+14% MoM in rand terms). Tencent defied a generally tough environment for Chinese shares as it reported better-than-expected results, highlighting a renewed focus on profitability and the quality of revenue growth. Capitec also experienced a noteworthy month (+18.5% MoM) with strong results and particularly encouraging growth in transaction fee income. Harmony Gold mining was another standout performer in November (+35% MoM), and while the rand price of gold (+23% YTD) has provided a solid tailwind to earnings, the company’s November trading update also showed a better-than-expected operating performance. Bidvest (-11% MoM) was one of the month’s biggest underperformers as a disappointing trading update revealed muted operational performance, with volumes and margins falling more than anticipated. Energy counters also underperformed (Sasol -11% MoM, Thungela -13% MoM) as lacklustre economic activity in China (one of the biggest energy importers) weighed on energy prices (Brent crude oil -5% MoM).

A larger-than-expected spike in SA headline inflation (+5.9% YoY), driven predominantly by volatile food and energy prices, was in sharp contrast to the continued grind lower in core price increases (+4.4% YoY). Core price inflation dropped below the SA Reserve Bank’s (SARB’s) target mid-point (4.5%), and this was enough to convince the SARB to hold rates steady at 8.25% for the third consecutive meeting, keeping the country’s benchmark interest rate at the highest it has been since 2009.

The SA government’s 10-year bond yield followed global bond yields lower, ending the month at 11.6% p.a. However, the local currency was unable to capitalise on general US dollar weakness, falling 1.1% MoM against the US dollar.



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WEBINAR | The Navigator – Anchor’s Strategy and Asset Allocation, 2Q24

Anchor CEO and Co-CIO Peter Armitage will host the webinar, provide an introduction to current global and local market conditions and give his thoughts on offshore equities. Together with Head of Fixed Income and Co-CIO Nolan Wapenaar, Pete will also discuss Anchor’s strategy and asset allocation for 2Q24, focusing on global equities and bonds. In addition, Fund Manager Liam Hechter will provide insights into local equities, highlighting some investment ideas; Global Equities Analyst James Bennet will discuss Ferrari and give an update on Tesla, and finally, Analyst Thomas Hendricks will participate in a Q&A with Peter, explaining the 10-year US Treasury to attendees.