JSE Surges in Week 37, Fueled by Strong Foreign Inflows and Bond Market Conviction

Equity Indices: A Resounding Rally in Resources

The equity markets were overwhelmingly positive, with major indices posting significant year-over-year (YoY) gains. The standout performer was the Resource 10 Index, which skyrocketed by a remarkable 82.32% YoY, underscoring the strength in the commodities sector. The Top 40 Index also demonstrated impressive growth, rising 30.48% YoY, while the broader All Share Index was up 27.42%.

However, the gains were not evenly distributed. The Financial 15 Index saw a more modest increase of 5.59%, while the AltX index for smaller companies contracted by 3.16%. From a risk-adjusted perspective, while the Resource 10 offered the highest return, it also came with the highest volatility. The Top 40 provided a more balanced risk-return profile, positioning it favorably on the efficient frontier.

For a detailed breakdown of each index's performance, risk metrics, and rank, explore the interactive charts in the dashboard below.

Market Mechanics: Turnover and Foreign Capital Confirm Strength

The mechanics of the equity market confirm the bullish sentiment. Weekly turnover value surged to R166.1 billion, a significant increase from R115.4 billion during the comparable week in 2024. This surge in activity was supported by positive foreign sentiment, with net foreign purchases totaling R2.32 billion for the week.

Market efficiency also showed improvement. The average trade size grew to R78,623 from R51,440 in the prior year, indicating larger, more confident transactions. Furthermore, reported trades (block trades) constituted a significant portion of the total value, reflecting substantial institutional activity.

For a deeper look at trading volumes, foreign flows, and liquidity trends, please see the full analysis in the dashboard below.

Interest Rates: A Strong Vote of Confidence in Bonds

The interest rate market delivered one of the week's most compelling stories, driven by powerful foreign investment. The market recorded a massive +R44.4 billion net foreign inflow, signaling strong international confidence in South African debt instruments.

Performance was strongest in longer-duration bonds, with the 7-12 year maturity bracket leading with a +17.37% YoY return. This outperformance suggests that investors have a deep conviction in future interest rate cuts, as longer-term bonds are more sensitive to changes in yield. Further underscoring the market's appeal, bonds traded at an average discount of 4.3%, suggesting that investors still see them as attractively priced.

To assess analysis of bond performance across different maturities and view risk-adjusted returns, please refer to the dashboard below.

Derivatives: Positioning for Future Rate and Commodity Moves

The derivatives market provided a more nuanced view, with traders actively positioning for future market movements. The Interest-Rate Derivatives space saw a dramatic surge in activity, particularly in Bond Futures, where the traded value more than doubled week-over-week. This explosion in volume, while Open Interest remained relatively stable, points to significant hedging and speculative activity related to anticipated interest rate changes.

In contrast, the Commodity Derivatives market experienced a slowdown, with the value of futures traded declining by 21.65% compared to the previous week. However, Commodity Options saw a healthy increase in both value traded (+35.41%) and Open Interest (+7.88%), indicating that traders are using options to strategically position themselves amidst evolving commodity prices.

For a granular view of WoW changes, turnover vs. Open Interest, and other derived metrics for all derivative instruments, view the complete dashboard below.