JSE in push for fifth month of gains

The JSE winning streak that saw it achieve a fifth consecutive month of gains in April global data could continue in May, with local equities boosted by better-than-expected global economic data.

Signs of improving global growth are offsetting more subdued local business conditions and domestic political uncertainty, analysts say.

The JSE climbed 3.66% in April, and the local bourse needs to rise only  another 1.6% before fully recovering from 2018’s 11.37% loss.​

A dovish tilt by the US Federal Reserve in January set the stage for a rally by global equities in 2o19 , while fears over global growth slowing in 2019 have eased amid better-than-expected economic data.

US GDP rose 3.2% in the first quarter of 2019, much better  than expected, while a series of economic releases from China have also helped ease concerns about an economic slowdown in the world’s second-largest economy.

The global environment remains supportive for local equities, said Old Mutual Multi-Managers strategists Dave Mohr and Izak Odendaal in a note, despite a sense of gloom about domestic economic prospects, as well as political uncertainty.

The JSE was becoming increasingly international, the strategists said, and more than half of revenue of listed companies was now generated overseas.

Another positive offshore factor is the rising price of Hong Kong listed tech giant Tencent, which has recovered in 2019 due to easing concerns that Chinese regulators will clamp down on its gaming business.

The JSE should rise even higher in May, because Naspers is on the move upwards, said Vestact CEO Paul Theron. This was due to a continued push higher by Tencent, of which Naspers owns almost a third, he said.

The JSE has also found some support from recent stability in the rand, whose volatility has eased after ratings agency Moody’s Investors Service opted not to review SA’s credit-rating in March.