While firms with offshore HQs and operations account for a big share of the JSE market cap, only about a quarter of the shares of the foreign-domiciled companies like BAT are actually available to South African investors, according to a 2017 Ownership Monitor report commissioned by the Treasury. This means that the stratospheric market capitalisation of the JSE is an illusion. In that report, 55% of the JSE’s market cap was available in 2017 to South African investors.
Uncertainty about global economic growth because of a developing trade war between the US and China might, for instance, prompt foreign investors to sell shares on the JSE and keep the money in cash or bonds. A slump in commodities might mean investors take a dim view of our mining companies’ prospects and move into US manufacturing firms, for example.
While the big foreign-based firms and the exporters depend on the global economy, a stagnant local economy has made life hard for South African-based companies. Stock markets and economic growth do not rise and fall in tandem, and stock market performance can be decoupled from growth, but low disposable income and weak consumer confidence et al do affect domestic investor share buying.
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