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We take a look at the Johannesburg Stock Exchange (JSE) trading statistics for the week ending 7 February 2020 and compare the numbers to that of a year ago. In what seems rather unusual these days, foreigners were net buyers of SA listed shares to the tune of roughly R3.1 billion
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Our highlight over the last week
The below is a brief summary of Peregrine Treasury Services weekly market commentary
South Africa still on the back foot
The rand has been under pressure for the most part of 2020, even weakening to above the R15.00 mark towards the close of last week. The stimulus deployed by the Chinese central bank, as well as the news of treatment of the coronavirus saw the local unit gain back most of the lost ground as the new week kicked off. However, evaporating business sentiment on Thursday once again pushed the local currency a leg weaker. Local sentiment remains fragile, as the global environment, the recent outbreak of the coronavirus and our own home-grown issues all weigh on growth prospects. Business Confidence dipped at the beginning of the year, resuming its downward trend.
Additional data released by the local economy indicate that manufacturing is still on a downward trajectory, shedding yet another 1.9 points, while total vehicle sales decreased by 8.1% year-on-year in January. Standard Bank PMI however ticked up in January to 48.3 points from the previous 47.6 points.
Rand weakness remains intact
The week ahead will see local policy come into focus as we gear up for State of the Nation Address. Key issues such as SOEs, expropriation without compensation and the nationalisation of the SARB are expected to make headlines. The rand is making its way towards the R15.00 mark once again, with our bias towards weakness remaining intact. The local unit has the potential to makes its way to R15.20 as we brace for policy outcomes from the ruling party ahead of national budget. The rand started Friday’s trading day at R14.90/$, R16.37/€ and R19.29/£.
South Africa still on the back foot
The rand has been under pressure for the most part of 2020, even weakening to above the R15.00 mark towards the close of last week. The stimulus deployed by the Chinese central bank, as well as the news of treatment of the coronavirus saw the local unit gain back most of the lost ground as the new week kicked off. However, evaporating business sentiment on Thursday once again pushed the local currency a leg weaker. Local sentiment remains fragile, as the global environment, the recent outbreak of the coronavirus and our own home-grown issues all weigh on growth prospects. Business Confidence dipped at the beginning of the year, resuming its downward trend.
Additional data released by the local economy indicate that manufacturing is still on a downward trajectory, shedding yet another 1.9 points, while total vehicle sales decreased by 8.1% year-on-year in January. Standard Bank PMI however ticked up in January to 48.3 points from the previous 47.6 points.
Rand weakness remains intact
The week ahead will see local policy come into focus as we gear up for State of the Nation Address. Key issues such as SOEs, expropriation without compensation and the nationalisation of the SARB are expected to make headlines. The rand is making its way towards the R15.00 mark once again, with our bias towards weakness remaining intact. The local unit has the potential to makes its way to R15.20 as we brace for policy outcomes from the ruling party ahead of national budget. The rand started Friday’s trading day at R14.90/$, R16.37/€ and R19.29/£.
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JSE Trading Statistics for the week ending 7 February 2020
Number of trades:
Number of trades (2020): 1 467 428
Number of trades (2019): 1 327 041
% change year on year: 10.58%
Volume traded:
Volume traded (2020): 1 444 700 000
Volume of traded (2019): 1 438 153000
% change year on year: 0.46%
Value of trades:
Value of trades (2020): R92 632 207 000
Value of trades (2019): R88 420 534 000
% change year on year: 4.76%
Foreign purchase/selling:
Net sales/Purchases (2020): R3 096 302 000
Net sales/Purchases (2019): R1 112 308 000
So year to date (YTD) foreigners have been net seller/buyers:
Net sales/Purchases (2020): -R3.370 billion
Net sales/Purchases (2019): -R13.676 billion
So a year ago foreigners were net sellers of SA listed shares to the value of -R13.676 billion for the YTD while this year they have been net sellers to the tune of -R3.370 billion in the year to date (YTD). While the numbers for this is year is a lot better than the previous year the fact is that foreigners remain net sellers of SA listed stocks and they have been for most of 2019, 2018 and 2017. However the strong sell off of SA listed shares by foreigners during the last few weeks was mainly driven by fears around the Coronavirus and the impact it will have on China's growth and the demand for resources by China from emerging markets such as South Africa and the impact this will have on growth in South Africa and earnings of SA listed firms,
However the above still shows that foreign capital is still leaving South African equities in vast amounts. This while the South African government continues to try and convince investors that South Africa is open for business. But the large scale corruption, poor government service delivery, slow economic growth, restrictive labour laws, worries about property rights, crime and general public disorder in the forms of strikes and looting are keeping potential investors away from South Africa.
JSE total market capitalisation:
Market Cap (2020): R17.720 trillion
Market Cap (2019): R14.927 trillion
% change year on year: 18.71%
So as shown in the JSE total market capitalisation above, the value of the overall market capitalisation of the stocks listed on the JSE has increased significantly over the course of the last 12 months.
See our JSE Calendar tracker for more.
Key issues for the market and South Africa during 2020 will be:
Number of trades (2020): 1 467 428
Number of trades (2019): 1 327 041
% change year on year: 10.58%
Volume traded:
Volume traded (2020): 1 444 700 000
Volume of traded (2019): 1 438 153000
% change year on year: 0.46%
Value of trades:
Value of trades (2020): R92 632 207 000
Value of trades (2019): R88 420 534 000
% change year on year: 4.76%
Foreign purchase/selling:
Net sales/Purchases (2020): R3 096 302 000
Net sales/Purchases (2019): R1 112 308 000
So year to date (YTD) foreigners have been net seller/buyers:
Net sales/Purchases (2020): -R3.370 billion
Net sales/Purchases (2019): -R13.676 billion
So a year ago foreigners were net sellers of SA listed shares to the value of -R13.676 billion for the YTD while this year they have been net sellers to the tune of -R3.370 billion in the year to date (YTD). While the numbers for this is year is a lot better than the previous year the fact is that foreigners remain net sellers of SA listed stocks and they have been for most of 2019, 2018 and 2017. However the strong sell off of SA listed shares by foreigners during the last few weeks was mainly driven by fears around the Coronavirus and the impact it will have on China's growth and the demand for resources by China from emerging markets such as South Africa and the impact this will have on growth in South Africa and earnings of SA listed firms,
However the above still shows that foreign capital is still leaving South African equities in vast amounts. This while the South African government continues to try and convince investors that South Africa is open for business. But the large scale corruption, poor government service delivery, slow economic growth, restrictive labour laws, worries about property rights, crime and general public disorder in the forms of strikes and looting are keeping potential investors away from South Africa.
JSE total market capitalisation:
Market Cap (2020): R17.720 trillion
Market Cap (2019): R14.927 trillion
% change year on year: 18.71%
So as shown in the JSE total market capitalisation above, the value of the overall market capitalisation of the stocks listed on the JSE has increased significantly over the course of the last 12 months.
See our JSE Calendar tracker for more.
Key issues for the market and South Africa during 2020 will be:
- Exchange Rate (seems to be see sawing a lot. See our exchange rate page)
- Coronavirus and the impact it will have on Chinese demand for resources from South African commodity firms
- The impact of the two 25 bp cut announced by the South African Reserve Bank (SARB) monetary policy committee towards the end of 2019 and early 2020 and the impact will have on the Rand as well as the South African economy on the medium to long term. Additional interest rate cuts are now being discussed considering the muted inflation numbers published by Statistics South Africa yesterday and discussed earlier in this article
- ESKOM's financial woes and continued loadshedding and weaker than expected tax collections is forcing government to borrow more money, which is negatively affecting the South African exchange rate, and potential credit rating cuts coming for South Africa's government which pushes up the cost of borrowing, and this at a time when government is borrowing more and more
- Expropriation of land without compensation (EWC) has gone quiet in recent months but we are sure the EFF will bring it up again soon to get some airtime
- Potential expansionary monetary policy coming considering the very weak economic growth numbers
- Sluggish economic growth. See our SA GDP page and high levels of unemployment
- Additional tax increases that will likely be announced in the budget speech and how it will affect South African consumers spending patterns and potentially increase inflation levels as taxes were increased by rates higher than inflation. In particular lack of bracket creep relief and higher sin taxes, fuel levies and road accident fund levies will hurt consumers.