Africa-Press – South-Africa. South African equities are on track for one of their best annual performances on record for the past 30 years, with the benchmark index up over 25% in rand terms.
In dollar terms, the return from South African equities is even higher as the rand has gained some ground against the greenback in 2025.
This is particularly remarkable considering the poor performance of South Africa’s economy so far in 2025, with it only being 0.6% bigger than it was a year ago.
However, this is because South Africa’s financial markets do not reflect the performance of the local economy, with many of the largest companies on the JSE earning a significant share of their revenue outside the country.
Chief investment strategist at Old Mutual’s Symmetry Izak Odendaal explained that many things still function relatively well in South Africa and that some companies have been able to grow strongly in a stagnant economy.
The main drivers of the strong rally in South African equities have been a record gold price and surging platinum prices.
This has resulted in miners on the JSE soaring so far in 2025 as investors expect a substantial pickup in profits from these companies as metals prices rise.
While South Africa is a relatively small producer of gold, the JSE is still home to some of the world’s largest miners of the precious metal.
This has seen the resources index skyrocket and bolster the performance of the Top 40 index and the All Share, Odendaal explained.
The best year for South African equities was 1999, when the stock market soared off a low base due to the uncertainty of the prior decade and the Asian Debt Crisis of 1997 to 1998.
Odendaal said one of the key features of equity markets is that they trend higher over time despite short-term volatility.
“Don’t be scared by the phrase ‘all-time high’ since markets will naturally break records as time progresses. Rather, the question is whether prices are running ahead of profits. This is not the case in South Africa,” Odendaal said.
He also explained that very few people would have thought the South Africa market or equities more broadly would have had such a strong year.
“This highlights how these things are unpredictable, and the drawbacks of trying to time markets,” Odendaal said.
“Unless you have a crystal ball – one that actually works – you just have to remain invested to benefit from these lurches higher, sitting through uncomfortably periods of volatility and flat or negative markets.”
The graph below shows the performance of the JSE All Share Index in 2025 compared to the previous thirty years.
In a stagnant economy
Many people would wonder how such a strong performance from South African equities is possible in a stagnant local economy.
Odendaal said the answer is two-fold – negative news sells and the financial markets do not completely represent the economy.
Firstly, South Africa is very lucky to have a free press and dedicated investigative journalists working on exposing truths, Odendaal said.
Many corrupt schemes have been cracked open by brave reporters, and often it is the media that pushes government agencies into action.
However, the news doesn’t give the full picture. Negative or shocking headlines will always grab more attention, and attention sells newspapers.
“Yet many things still work well every day in a R7 trillion per year economy of 60 million people. People go to work, children go to school, families celebrate and mourn together, communities gather in churches and mosques and so on,” Odendaal said.
“Millions of daily interactions and transactions go unreported because they are unremarkable, but they are also the bedrock of the economy and society.”
Secondly, financial markets also do not reflect the full picture. It is only the largest companies that list on the JSE, and sometimes the strong get stronger in tough economic conditions as weaker players fall away.
Moreover, a few JSE-listed companies rely only on the South African business climate, with many of the largest companies having significant operations outside of the country.
For instance, the announced merger of Anglo American and Teck Resources will pull Anglo further from its South African roots to become a Canadian-headquartered global mining giant. However, it will retain its JSE listing.
Of the top 10 companies by market value on the JSE, only Capitec and FirstRand truly count as local companies when considering where most of their revenue is generated.
The biggest property company on the JSE by market value, NEPI Rockcastle, runs an Eastern European real estate portfolio.
“The hodgepodge of local and international firms listed on the JSE is collectively growing profits at a steady pace despite a lacklustre South African economy,” Odendaal said.
The surge in precious metal prices clearly helps, with gold up 38% year-to-date and platinum 50%.
The gains in local equities this year have been on the back of strong earnings growth, and the bottom-up analyst consensus view is that this continues next year.
It means that despite the rally, the local market still trades on an attractive forward price-to-earnings ratio of around 10 times, a starting point that has historically delivered solid long-term real returns.
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