THE last four years have been a challenging time to make returns on the Johannesburg Stock Exchange, with massive losses made across certain shares and sectors as common as big gains.
The JSE - excluding Naspers and Richemont - has only returned 6% for the year-to-date. This is barely above the YTD average inflation of 5.1%.
That being said, it is still possible to make considerable returns on the JSE. Had a person placed R100 000.00 equally into Kumba Iron Ore, Trencor, Naspers, Exxarro and Anglo American Platinum, the shares would be worth a whopping R172 382.00 today. That is an amazing return of 72.38% for the year to date!
Let us look at the above-mentioned shares, returns and values:
- Kumba Iron Ore (start year price R159.00, current share price R296.01 and 84.75% return for year);
- Trencor (start year price R28.29, current share price R49.50 and 75.00% return for year);
- Naspers (start year price R2 012.29, current share price R3 845.00 and 91.03% return for year);
- Exxarro (start year price R90.15, current share price R149.21 and 65.52% return for year); and
- Anglo American Platinum (start year price R264.40, current share price R385.00 and 45.61% return for year).
Kumba is a high quality steel producers with operations mainly in Limpopo and the Northern Cape. The company’s share price has had a massive recovery, rising from R25.35 on January 14 2016 to the current price of R296.32.
The recovery has largely been due to increased demand for iron ore because of global economic growth, especially in China. The share was also previously undervalued which amplified the returns over the past two years.
Trencor is a holding company listed on the JSE. Trencor benefits from operations that focus on owning, leasing, managing and trading marine cargo containers worldwide, and related finance activities.
After the company was nearly suspended from the JSE in October the last year, it has seen a significant jump in the share price led by a change in management in June this year.
Naspers is a global internet and media company that operates in 130 countries around the globe. It has continued to invest heavily in internet businesses around the world. The reason for the rise in the share price has mainly been because of the company’s shareholding in the biggest internet company in China called Tencent, of which Naspers owns 33%.
Tencent’s share price has increased significantly over the past year, resulting in a similar increase in the Naspers share price. The 33% shareholding in Tencent is worth $167bn, which is more than the $120bn total market cap of Naspers.
Exarro is a diversified mining company with operations in South Africa and other countries such as the Democratic Republic of the Congo, USA, and Europe. Exxaro’s share price increased by 65.52% for the year. The share price was at an extreme low at the end of the 2015, as was the case with the other resource companies. The company was trading at around R 41.10 per share during this period.
The recovery in the share price has also been largely due to the increase in demand for resources, because of synchronised global economic growth and a general rerating of resource shares in South-Africa.
Anglo America Platinum [JSE:AMS]
Anglo American Platinum is part of the Anglo Plc group and one of the largest platinum miners in the world. The company is responsible for almost 40% of all new platinum mined in the world. Its main operations are based in South Africa and Zimbabwe.
Anglo Platinum has also seen a significant hike in its share price since the start of the year, which has risen by 45.61% and increased from R264.40 to R385.00. The increase, as is the case with most of the other resource companies, has been because of increased demand for resources from the growing global economy and a general rerating of resource shares.
The average platinum price also recovered from very low levels during the end of 2015.
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- Werner Erasmus is regional manager for Gauteng and Brett Birkenstock is an analyst at Overberg Asset Management.
* Fin24's parent company Media24 is part of the Naspers Group. Naspers owns a 34% stake in Tencent.