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There are certainly few institutions where the saying “every dog has its day” is as appropriate as in the case of the JSE.
Who would recently have guessed that a poultry group, Astral Foods, would emerge as the strongest share among the larger companies on the JSE?
Its share price has doubled over the past six months after it struggled for a part of the year with all kinds of problems related to chicken products, especially the feared H5N8 avian flu epidemic on some of its farms.
It is, nevertheless, enjoying a strong bull market and the consensus recommendations of analysts who follow it are positive: four rated it a buy, one a hold and none rated it a sell.
Earlier this year, mining counters were well represented among the top 10 strongest shares. Now there is not a single one left.
The strength of the change in gears on the JSE is apparent from the fact that TFG is second on the list with Mr Price fourth.
Other retailers, which were relatively weak not so long ago – such as Massmart and Lewis – are now suddenly popular.
The large banks are also doing well. Capitec, which regularly counted among the strongest shares, is the exception. It’s still paying the price of the attack launched by short-sellers, based on the controversial report by the New York-based Viceroy Research.
This report depressed its price by about 16% before it recovered to some extent.
Considering that the share increased by about 460% over the past five years, before the fall, then long-term shareholders have little to complain about.
The bull’s dominance on the JSE is evident from the fact that 58% of the largest shares are lying above their 200-day exponential averages (EMAs).
However, some commentators are becoming increasingly worried about political developments, especially as far as the land question is concerned.
President Cyril Ramaphosa and Julius Malema, leader of the EFF, can make as many reassuring statements as they want, but fact of the matter is that should the Constitution be amended to facilitate expropriation without compensation, the change could cause serious long-term damage.
As one mine executive said, “If I start developing a mine that will begin production over (say) five years, how do I know that I will not be dispossessed once it starts making money?”
Steinhoff is still by far the weakest share on the JSE and it is worth noting that any information becoming available makes the situation seem even worse.
One example is the reports, based on leaked emails, that Markus Jooste, its former CEO, and some of his managers colluded to fudge the group’s results to make them look good.
Warren Buffett has an important rule when there’s talk of skulduggery at a company: get away and stay away.
Fortress B and Resilient, which are second and third respectively on the list of the weakest shares, have also suffered from rumours that they are in Viceroy’s sights.
They and other related companies in the group are being accused of share-price manipulation, among other things.
Of the shares that have broken through, there is only one that looks interesting. It’s the packaging group, Mpact, which has undertaken large-scale extensions that have reached a stage where they can make meaningful contributions.
Amplats, Vodacom, Woolworths, KAP and Tharisa are lying close to their 200-day EMAs, where some investors tend to buy because they believe it’s a support level.
Lucas de Lange is a former editor of finweek and the author of two books on investment.
This article originally appeared in the 15 March edition of finweek. Buy and download the magazine here.
