BUSINESS MAVERICK : A rocky year for almost every firm on the JSE, except the mining companies

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Covid-19 took its toll on global economies and SA’s in particular – that much can be seen in the performance of SA’s blue-chip banking, retail and industrial stocks, which were hammered. Those that recover and thrive will be the companies with the strongest balance sheets and best management.

It is safe to say that the JSE had an interesting year in 2020. After crashing spectacularly in March, the stock exchange recovered its losses within weeks. Considering the devastation that Covid-19 wrought on the South African economy, the fact that the JSE ended the year up 0.63% from where it began in January 2020 is remarkable.

Banks, which were expected to prop up the economy during and after the lockdown by providing extended terms and additional loans to individuals and businesses, fared badly over the year, with the Financial 15 falling 22.69% over the 12 months. Among the bigger losers was Nedbank, down 39.6%, and Standard Bank, down 24.5%, though it is worth noting that in the last six months these financial stocks have begun to climb back out of the doldrums.

Among the mining groups, DRDGOLD and Pan African Resources were the standout performers, with their share prices surging by 139% and 122%, respectively, although this growth has slowed in recent months. Kumba and Goldfields also grew strongly by 49.3% and 43.5%, respectively. Support for this sector comes from increasingly stringent emission regulations in Europe and to an extent China, which is driving up the demand – and price – for palladium and rhodium. Platinum is gaining by virtue of the fact that work is being done to substitute palladium with platinum in autocatalysts.

that its pattern of growing sales and taking market share had continued. The retailer reported that headline profits grew by almost 17%. Unlike almost every other Top 100 company, dividends were increased, by a hefty 20%. As a result, the share price jumped 22% in three days, reversing previous losses and ensuring the retailer ended the year up 11%.

 

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