ARTICLES

JSE All Time Record High

On Friday last week, the 12th of July 2024, the JSE Overall index closed at 81686 – an all-time record high. Consider the chart:

The chart shows that the Overall index made a low on the 29^th of September 2022 and then a cycle high on the 27th of January 2023. The index made a low in October 2023 (2^nd touch point) and then again in March 2024 (3^rd touch point). Since then, it has been following international markets, and particularly Wall Street, up.

In part, this upward move, especially recently, is a positive response to the formation of the Government of National Unity (GNU) following our very successful and peaceful elections, but the main driving force behind the JSE’s performance is undoubtedly the extraordinary record-breaking run on Wall Street.

The latest inflation data from America shows that both the core and headline consumer price index (CPI) were better than expected with the core number coming in at -0,1%. This is the first time in four years that prices have actually declined. Clearly, the high level of interest rates is bringing inflation down closer to the Federal Reserve Bank’s goal of 2%. Markets now have an 85% expectation that interest rates will begin falling in September this year – and that expectation is driving Wall Street up to a series of new all-time record highs. Consider the chart:

In January of this year we published an article entitled The Great Bull Resumes in which we said, “Our calculations indicate that the S&P could go as high as 6458 on this leg…”

Our view is that the S&P will continue going up for some time now, driven by the profitability expected to come from artificial intelligence (AI) and switch to renewable energy which is gaining momentum world-wide.

The JSE always ends up following Wall Street sooner or later. Many of our largest shares are international companies and listed on other exchanges. For this reason, the systematic drivers of the JSE tend to be developments overseas rather than local issues.

CAPITEC

One of the shares that has been benefiting directly from the shift in international sentiment and the implementation of the GNU is Capitec Bank. On Friday last week Capitec published a trading statement in which it projected that its headline earnings per share (HEPS) would rise by between 25% and 35% in the six months to 31^st August 2024. This is a dramatic improvement and shows that Capitec fully warrants the high rating that it enjoys on the JSE.

We added Capitec to the Winning Shares List (WSL) on 4^th November 2023 at 185496c per share. It closed on Friday last week at 273225c – a gain of 47,29% in 8 months.

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PDSNET ARTICLES

Smart Local Investors

The last two months have been wild on the markets – mainly because of Trump’s ill-advised, on-again, off-again tariff policies. The issue now is:

Will this morph into a full-blown bear trend? Or is this correction almost over?

From his election victory on the 6^th of November 2024,

Jerome Powell

The Federal Reserve Bank (“the Fed”) is completely outside the control of the President and Executive Branch of the US government. The chairman of the Fed is appointed for a renewable 4-year term by the President. The President cannot remove the Chair without cause. The current chairman, Jerome Powell was appointed by Trump during his first term as President and reappointed by

Uncertainty Soars

Investors are by their very nature risk takers, but they are always trying to reduce the risk which they have to take to a minimum. Donald Trump, with his threat of an international trade war and his on-again, off-again tariffs has significantly increased the level of risk in markets across the world. This can be seen in the extraordinary volatility in the S&P500

Liberation Day

Trump has done the unthinkable. He has deliberately engineered the collapse of the US and world stock markets in the nonsensical belief that somehow an international trade war will make Americans richer. Nothing could be further from the truth. His actions have taken the S&P down from its all-time record high of 6144.15 on 19^th February 2025 to Friday’s

The Creation of Money

The money supply of a country is a symbol of the goods and services of that country. Obviously, if the size of the money supply is increased more rapidly than the real growth of its economy, then you have more money chasing the same goods and services, resulting in rising prices. Since, over the long term, the only organisation that can create money is the government,

V-Bottom is likely

The 10% collapse of Wall Street, which is a direct result of Trump’s random policy of on-again, off-again tariffs, is very similar to what happened to Wall Street in February/March 2020 when investors tried desperately to accurately discount the impact of the COVID-19 pandemic.

Normally, corrections in the market

The Trump Correction

It is relatively unusual for the activities of American presidents or what they say to have an impact on the New York Stock Exchange, especially during their first 100 days in office. Trump, however, is the exception. His confused, on-again, off-again rulings on tariffs have rattled the market. Markets hate uncertainty and even Trump himself doesn’t appear to know exactly

Dividends

Investors know that the return on a share is made up of a capital gain plus the dividend. Private investors are mostly attracted to the prospect of making a capital gain on the shares which they buy and do not often consider the dividends. What they perhaps do not realise is that a capital gain is actually just the dividend in a different form.

Quarterlies

One of the major differences between the US equity markets and the JSE is that listed companies in America are required to report every 3 months, not every 6 months as they are on the JSE. The quarterly reports of the S&P500 companies are closely followed by investment analysts and predictions are made for their profits.

Gold's Record Run

On Friday last week, gold reached a new all-time record high of $2871.42 per ounce. Its gain in rands has been even more impressive rising from less than R1000 per ounce in August 1992 to last Friday’s close of R52864.85.

In our Confidential Report of March