JSE-listed equities continue upward trajectory in the second quarter - Anchor Capital

JSE-listed equities continued their upward trajectory in in the second quarter of 2025 (2Q25), Nolan Wapenaar and Peter Armitage, Chief Investment Officers at Anchor Capital, said on Wednesday.

Following on from a strong opening quarter, JSE-listed equities continued their upward trajectory to end 2Q25 up another 9.7%.

Year to date, the FSE/JSE Capped Swix has risen by 16.1%, and the MSCI South Africa Index is up 30.3% (in US dollar terms). This puts the JSE as a standout performer in global equities year to date and over the past 12 months.

"In April, we were still digesting the double threat of the GNU (Government of National Unity) failing and the Trump administration imposing growth-crippling tariffs across the globe. These factors were primarily to blame for us turning more defensive on local equities 12 months out," they said. "While some of the risks have since de-escalated, both locally and abroad, we still find the set-up for JSE equities more balanced than at the beginning of 2025. Thus, we have maintained a neutral position on the asset class with a rand-denominated total return of 11% and a US dollar total return of 12.6% over the next 12 months."

Wapenaar and  Armitage said they entered 2025 positive on domestic equities, expecting a continuation of the trend that kicked off in June 2024, following the formation of the GNU in South Africa. The investor-friendly outcome of the 2024 National and Provincial Elections resulted in raised hope of much-needed structural reform, potentially lifting South Africa out of the growth trap of sub-2% GDP growth, something the local economy has struggled to achieve over the past ten years.

However, the actual outcome so far in 2025 could not be more different, they said.

While the JSE had recorded a six-month return of 16%, more than half of the return (8.4%) has come from the basic materials sector, and  5% has come from the rand-hedge component of the local index.

"This begs the question: Why have SA Inc. stocks underperformed so dramatically against a backdrop that would typically see them outperform? In our view, this is simply a case of high expectations for an outcome that, so far, has been somewhat underwhelming," they said. 

Speaking at an Anchor media roundtable, Mike Gresty, a fund manager at Anchor Capital, said locally, SA Inc. is net down this year.

GDP has been downgraded, business and consumer confidence has given up gains made in the second half of last year.

This despite the fact that there was a lot of promise in the second half of last year after the GNU and valuations were cheap and it was supposed to unfold in this year. 

He said the market performance this year has been concentrated in about 10 stocks. Most of these are precious metals, such as gold and platinum; and Naspers; and telecos.

Gresty said it's a very hard environment. People looking at commodities have divided opinions of were we are. Equities are performing well but none of them are compounding growth stories.

Despite the GDP coming down, there are indicators that the lot of the consumer is getting better: interest rates are coming down and fuel prices. There is the two-pot withdrawals that are putting money in people's pockets and there is less load shedding. 

He said this was not the time to give up on local equities. Some companies that Gresty was looking at were Boxer, WeBuyCars, Hudaco, Tiger Brands, Discovery, Capitec, Afrimat, amoung others. Education stocks Stadio and ADvTECH. One had to look at company specific stories. 

"Despite a lack of lack of growth in South Africa, there's still a lot of great company specific opportunitites," Gresty said.

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