The JSE rally broadens in October as precious metal miners lose momentum - Anchor Capital

The JSE continued its strong run into October with  the FTSE/JSE Capped SWIX Index up 1.8% month on month (m/m), leaving the local bourse up 33.4% year to date (ytd). The shape of the JSE return in October was decidedly different to the themes, which dominated for the first three quarters of 2025.

Precious metal miners were responsible for two-thirds of the JSE’s ytd performance through September, with gold and platinum miners rallying by 184% and 173%, respectively, over those nine months. Meanwhile, stocks geared to the domestic economy were up 4% in aggregate over the same period. During October, though, the precious metal miners were a drag on the JSE's performance with gold miners down 5% m/m and platinum miners down 10% m/m, while the domestically geared companies rallied by 8% m/m collectively. While the gold price was up in October, up 3.7% m/m, it dropped by 8% in the latter part of the month, breaking some of the momentum which had taken it to an all-time high of $4,381/oz on 20 October in an incredible run of a gain of 110% since the start of 2024.

Capitec, up 11% m/m  reported earnings growth of 26% year on year (y/y), active client growth of 8% y/y and a growing business banking segment (now > 40% of earnings). Asset manager Ninety One, up 13% m/m, reported assets under management (AUM) growth of 9% quarter on quarter, while an operating update from Discovery, up 12% m/m, showed a favourable claims environment and positive new business volumes. MTN, up 19% m/m continued its positive share price momentum into October, leaving it 94% higher ytd. We Buy Cars, up 17% m/m delivered an operating update that fell short of investors’ lofty expectations, as did The Foschini Group, down 16% m/m, which guided to a 20%-25% y/y drop in headline earnings - double the decline that analysts were anticipating.

The SA government’s 10-year borrowing rate ended October below 9% per annum (pa) for the first time since 2021 (when US 10-year borrowing rates were <2% pa.). The latest data showed inflation at 3.4% y/y still hovering around the 3% level, which is expected to be the level that the South African Reserve Bank will begin targeting imminently. The falling yields on SA government debt drove substantial gains for bondholders, with the SA All Bond Index up 17% ytd. The local currency fared relatively well against a strong US dollar, down 0.4% m/m.

Global equities

Meanwhile, developed market (DM) equities climbed for a seventh consecutive month in October with the MSCI World Index up 2% m/m, pushing DM equity market performance to a 20.2% gain ytd. The mega-cap tech and AI cohort maintained its leadership position with the Bloomberg Magnificent 7 Index  up 4.9% m/m. More than 60% of S&P 500 companies released earnings during October. Amongst those, Alphabet, up 16% m/m, and Amazon, up 11% m/m, both reported strong growth in their cloud businesses, with Alphabet also flagging strong demand for its AI services. The results helped alleviate investor concerns regarding massive amounts of AI infrastructure spending by these companies not filtering through to revenue growth. Meta down 12% m/m was the mega-cap tech laggard with its announcement of “notably larger” capital spending on AI infrastructure and computing. At the same time, its Reality Labs division, which builds Meta’s wearables, lost another $4.4 billion in the most recent quarter.

Emerging market (EM) stocks outperformed their DM peers in October with the MSCI EM Index up 4.2% m/m, leaving them 33.6% higher ytd. Much of the October EM Index gains were a function of the performance of the Korean and Taiwanese chipmakers (TSMC 14% m/m, SK Hynix 58% m/m and Samsung Electronics 26% m/m), which added 3% to the MSCI EM Index performance in October as the AI infrastructure spending boom showed no signs of abating.

Peter Little is a fund manager of Anchor Capital

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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