JSE ends higher for second consecutive month on back of BHP bid for Anglo

South African stocks carried their strong momentum from March into April. Photo: File

South African stocks carried their strong momentum from March into April. Photo: File

Published May 6, 2024


By Peter Little

South African (SA) stocks carried their strong momentum from March into April with the FTSE/JSE-Capped SWIX Index up 2.9% month on month (m/m), dragging the local bourse into positive territory for the year, up 0.6% in the year to date.

Anglo American, up 33% m/m was responsible for almost 40% of the index return in April as it became the acquisition target of diversified mining peer BHP Group. BHP’s offer valued Anglo at $39 billion (R717bn), which the Anglo directors rejected as “significantly undervaluing” the company. BHP is said to be considering an improved offer.

Another significant contribution to the JSE’s performance in April came from investment conglomerates Naspers and Prosus, which rose 7% m/m, and whose biggest underlying investment, Chinese tech conglomerate Tencent, up 14% m/m, rallied as it benefited from strong momentum in Chinese shares. Tencent was further boosted by announcing an earlier-than-anticipated debut of one of the year’s most eagerly awaited mobile games.

Shares geared towards the SA economy fared relatively well in April – up 2% m/m in aggregate as they bounced back after a disappointing March, when pessimism around the upcoming SA elections seemed to peak.

Capitec, up 11% m/m was a stand-out performer among domestically geared stocks as it released 2024 earnings, which were up 15.6% year on year and towards the top-end of their guided range, with its active customer base having grown to more than 22 million.

April also saw a new listing on the JSE in the form of WeBuyCars, which was spun out of Transaction Capital. By the end of the month, the combined value of the We Buy Cars and Transaction Capital shares was roughly 6% ahead of the March month-end value of Transaction Capital shares.

Shares with predominantly non-SA earnings fell 4% m/m and were a drag on local equity market returns, weighed down by the poor developed market (DM) equity market performance and a currency headwind.

The rand strengthened against the dollar, up 0.5% m/m, finding itself alongside the Chilean peso as one of only two major currencies to strengthen against a generally strong US currency in April.

SA’s latest core inflation data was in line with expectations as core inflation, which was up 4.9% year on year dipped back below 5%, nudging closer to the SA Reserve Bank’s 4.5% target mid-range.

In another sign of reducing pessimism about the outcome of SA’s upcoming elections, the SA government’s 10-year borrowing rate ended the month at 12.2%, marginally lower month on month as the domestic rates market defied a global environment where yields generally pushed higher for the month.

Peter Little is a fund manager at Anchor Capital.