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We take a look at the Johannesburg Stock Exchange (JSE) trading statistics for the week ended 24 April 2020 and compare the numbers to that of a year ago.
South Africans are getting more or more frustrated with the lockdown and businesses are closing down an jobs being lost. But how is this affecting the stock market and trading on it? |
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Our highlight over the last week
Earlier in the week we covered the business impact assessment survey published by Statistics South Africa covering the impact of Covid-19 on businesses in South Africa. Below a short extract
Turnover relates to the income generated by a business when conducting its core operations within a specified timeframe, and forms a key measure of business performance. According to the Annual Financial Statistics survey conducted by Stats SA, turnover includes sales of goods, services rendered, leasing and hiring of capital assets, and rental/leasing of land, buildings and other structures. The survey showed that 85,4% of responding businesses had turnover that was lower than their normal range; 1,3% reported that turnover was higher than their normal range; and 13,3% reported that turnover was within their normal range (see image below). This was for the two-week reference period covered by the survey.
Read the full article here
Turnover relates to the income generated by a business when conducting its core operations within a specified timeframe, and forms a key measure of business performance. According to the Annual Financial Statistics survey conducted by Stats SA, turnover includes sales of goods, services rendered, leasing and hiring of capital assets, and rental/leasing of land, buildings and other structures. The survey showed that 85,4% of responding businesses had turnover that was lower than their normal range; 1,3% reported that turnover was higher than their normal range; and 13,3% reported that turnover was within their normal range (see image below). This was for the two-week reference period covered by the survey.
Read the full article here
JSE Trading Statistics for the week ending 24 April 2020
Number of trades:
Number of trades (2020): 1 965 092
Number of trades (2019): 853 011
% change year on year: 130.37%
Volume traded:
Volume traded (2020): 2 356 525 000
Volume of traded (2019): 763 930 000
% change year on year: 208.47%
Value of trades:
Value of trades (2020): R103 611 804 000
Value of trades (2019): R59 229 648 000
% change year on year: 74.93%
Foreign purchase/selling:
Net sales/Purchases (2020): R33 051 000
Net sales/Purchases (2019): R1 186 347 000
So year to date (YTD) foreigners have been net seller/buyers:
Net sales/Purchases (2020): -R33.159 billion
Net sales/Purchases (2019): -R25.816 billion
So a year ago foreigners were net sellers of SA listed shares to the value of -R25.816 billion for the YTD while this year they have been net sellers to the tune of -R33.159 billion in the year to date (YTD). So foreigners remain massive sellers of SA listed stocks, and the pace of their selling seems to be increasing every year. Which is not good news for the Rand, which keeps getting pumeled.
There are now massive fears regarding the Coronavirus and its impact on global economic growth, particularly the impact on China's growth and the impact it will have an South Africa's economic growth, since we supply loads of basic commodities too China, the world's second largest economy. We have seen in recent weeks many countries going into lockdown, and closing their borders, implementing travel restrictions, banning large crowd gatherings and sporting events, all in an effort to curb the spread of the virus.
With South Africa in lockdown the South African Reserve Bank estimated the direct impact of the 21 day lockdown to drag down GDP growth by -2.6%. So assuming the economy was set to grow by 0% this year, based on the bank's estimates the South African economy will shrink by 2.6% just due to the 21 day lockdown. So with the additional 2 weeks lockdown one can deduce that South Africa's economy will shrink by at least -4.3% due ti the 35 day lockdown
The data 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): R15.847 trillion
Market Cap (2019): R16.576 trillion
% change year on year: -4.4%
So while the markets retreated by over 30% during March 2020, the recovery to levels before the Coronavirus triggered sell offs has happened pretty quickly in April. See our JSE Calendar tracker for more.
Key issues for the market and South Africa during 2020 will be:
Number of trades (2020): 1 965 092
Number of trades (2019): 853 011
% change year on year: 130.37%
Volume traded:
Volume traded (2020): 2 356 525 000
Volume of traded (2019): 763 930 000
% change year on year: 208.47%
Value of trades:
Value of trades (2020): R103 611 804 000
Value of trades (2019): R59 229 648 000
% change year on year: 74.93%
Foreign purchase/selling:
Net sales/Purchases (2020): R33 051 000
Net sales/Purchases (2019): R1 186 347 000
So year to date (YTD) foreigners have been net seller/buyers:
Net sales/Purchases (2020): -R33.159 billion
Net sales/Purchases (2019): -R25.816 billion
So a year ago foreigners were net sellers of SA listed shares to the value of -R25.816 billion for the YTD while this year they have been net sellers to the tune of -R33.159 billion in the year to date (YTD). So foreigners remain massive sellers of SA listed stocks, and the pace of their selling seems to be increasing every year. Which is not good news for the Rand, which keeps getting pumeled.
There are now massive fears regarding the Coronavirus and its impact on global economic growth, particularly the impact on China's growth and the impact it will have an South Africa's economic growth, since we supply loads of basic commodities too China, the world's second largest economy. We have seen in recent weeks many countries going into lockdown, and closing their borders, implementing travel restrictions, banning large crowd gatherings and sporting events, all in an effort to curb the spread of the virus.
With South Africa in lockdown the South African Reserve Bank estimated the direct impact of the 21 day lockdown to drag down GDP growth by -2.6%. So assuming the economy was set to grow by 0% this year, based on the bank's estimates the South African economy will shrink by 2.6% just due to the 21 day lockdown. So with the additional 2 weeks lockdown one can deduce that South Africa's economy will shrink by at least -4.3% due ti the 35 day lockdown
The data 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): R15.847 trillion
Market Cap (2019): R16.576 trillion
% change year on year: -4.4%
So while the markets retreated by over 30% during March 2020, the recovery to levels before the Coronavirus triggered sell offs has happened pretty quickly in April. 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 not just Chinese demand for resources from South African commodity firms but the impact it will have on global trade, tourism, supply chains and ultimately global economic growth
- The pressure is starting to mount on the South African Reserve Bank with central banks across the world cutting rates in order to try and fight off the negative effects the Coronavirus has and will have on global demand and growth. The bank obliged and cut rates by a significant 100 basis points from 6.25% to 5.25%. In a shock move the Bank moved forward their May 2020 meeting to mid April and cut interest rates by a further 100 basis points.
- 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
- SA being downgrade to junk status by Moody's. All three major ratings agencies now rate South Africa's government bonds as "junk status" or sub investment grade
- Impact of the Coronavirus on South Africa's economic growth
- Impact of the nation wide lockdown on employment and economic growth in South Africa an the slow and gradual reopening the country after a full lockdown. If not enough is done to open up firms to operate millions in South Africa will lose their jobs.