Money thrown at the pandemic problem by developed countries will have to be paid back and the effects will be felt on the JSE
As the charts accompanying this article show, the V-shaped recovery is firmly in place and the catastrophic behaviour of world markets earlier in 2020 is a thing of the past.
What has caused this recovery during a time when investors have never been so uncertain, when virus infections are clearly not under control, tensions between the US and China seem to be worsening and the world seems bereft of strong and sensible leadership? Not to mention the additional factor of increasingly mobile and angry civil protests across the globe.
More than half of the JSE is not SA shares at all. The largest share, with a misleadingly Afrikaans-sounding name — Naspers — is actually a Chinese online gaming company, as more than 100% of the value of the share is in a Chinese firm called Tencent. The next largest share is British American Tobacco, which derives a paltry proportion of its revenue from SA. The vast majority of its profits come from selling cigarettes across the globe.
Take away the positive effect of the tech companies, and the S&P 500 is still 6% below its peak. James Downie, chief investment officer at investment portfolio design company AssetBase International, points out some sobering facts.
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