Resumo

DE BEER, Jesse; KEYSER, Nico  e  VAN DER MERWE, Ivan. Returns, political developments and economic forces: A historical perspective on the Johannesburg stock exchange (JSE), 2000-2010. Tydskr. geesteswet. [online]. 2022, vol.62, n.3, pp.453-475. ISSN 2224-7912.  http://dx.doi.org/10.17159/2224-7912/2022/v62n3a2.

To contribute to economic growth and development, a stock market, as an important economic indicator, should reflect the macroeconomic fundamentals of a country. How political and economic developments are reflected in the returns of companies listed on a stock market indicates the risk profile of specific companies and the stock exchange. The objective of this article is to provide a historical perspective on how political and economic developments were reflected in the returns of the Johannesburg stock exchange (the JSE Ltd.) in the period 2000-2010. The history of the JSE for this period can be divided into three stages: the stage before the global financial crisis (GFC), the GFC stage, and the post-GFC stage. During the pre-GFC stage, the JSE recovered from the Asian crisis of 1998, and the global boom in information and technology stocks led to a surge in technology stocks and indices on the JSE. When the dotcom bubble burst in March 2000, a sharp decline in share prices on the JSE followed. The aftermath of the 11 September 2001 attack in the United States led to a temporary decline in JSE stock prices, but they had recovered - in international markets as well - by May 2002. The JSE responded to local political events, such as the introduction of black economic empowerment legislation and the National Credit Act, and to international political events, such as the formation of the Brazil, Russia, India and China (BRIC) economic block. The commodity super cycle (2003-2008), low domestic interest rates and higher economic growth rates than in 2002 contributed to the continuous bull run in share prices on the JSE during this stage (2003-2008). The global financial crisis, regarded as the worst crisis since the Great Depression of 1929, had a severe impact on all economies globally and resulted in a worldwide recession. In South Africa, the effect of falling commodity prices had macroeconomic consequences in terms of employment levels, commodity exports, foreign fixed investment and the exchange rate. The risk premium for South Africa also increased, resulting in an outflow of foreign investor funds, a drop in the JSE stock market index, and a depreciating currency. The FTSE/ JSE All Share Index fell by 46% from an all-time high in May 2008 to a low in November 2008, before recovering by 39% in August 2009. Recovery in South African financial markets occurred relatively quickly, though, with the All Share Index rebounding by 30% during 2009. The resilience of the South African financial sector meant that South Africa largely escaped the most damaging effects of the global financial crisis. The global recession in 2009 and uncertainty regarding recovery in the global market resulted in the implementation of strong stimulating monetary and fiscal policy measures globally. Large fiscal deficits led to an escalation of government debts, while low interest rates and quantitative easing in developed countries resulted in a substantial inflow of funds to the South African share market in 2009 and the bond market in 2010. The FTSE/JSE All Share Index improved by 63% in 2009 and 2010, tracking international equity markets and higher commodity prices. Non-resident investors returned, particularly from 2009 onwards, as sentiment improved and risk appetite recovered. The momentum on the stock market was interrupted by the European debt crisis. The European sovereign debt crisis, which started in Greece in 2010 and spilled over to other European countries, prompted the European Union and the International Monetary Fund to establish an emergency facility. Despite the nervousness resulting from the European crisis, share prices on the JSE trended higher, tracking global equity markets and commodity prices. The current study concludes that the JSE reflected macroeconomic conditions, political changes and global events during the period 2000-2010. The JSE responded positively to higher commodity prices and improved economic and political prospects, but also reflected its growing vulnerability to contagious international events andfinancial crises, such as the dotcom bubble and the global financial crisis.

Palavras-chave : Johannesburg stock exchange (JSE Ltd.); returns; political events; economic events; global financial crisis.

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