2025: The Year the JSE Played Catch-up

In January this year, Nicolas de Clerq, quantitative analyst at Prescient Investment Management, made some predictions for the year which turned out to be surprisingly accurate, given the global geopolitical and financial-market upheavals that 2025 brought with it.

De Clerq remarked on the historically high valuations of the US equity market – its price-to-earnings (PE) ratio of 27 had been higher only twice in its history: once in 2021 and once before the dotcom bubble in 1999, and each time the market had fallen sharply thereafter.

Comparing the US market with the JSE, De Clerq wrote: “In contrast, we have a moderately positive view on SA equities, driven primarily by valuations. The JSE All-Share Index (Alsi) currently trades at a PE ratio of 12, which is well below its median level.”

He said that, historically, investors were cautious of emerging market equity owing to its relatively high volatility. However, a combination of comparatively low valuations and lower volatility on the JSE “could attract investors seeking better risk-adjusted returns. This situation has only occurred once before (in 2021) when the Alsi subsequently outperformed the S&P 500. As a result, 2025 may well be the year in which SA equities begin to catch up on the global stage.”

Well, catch up they have. The S&P 500 index of the top 500 American companies was up 15.88% for the year in US dollars to December 16. The Alsi delivered 34.21% in rands over the same period, or almost 50% in US dollars.

The standout shares were local gold and platinum miners. The top five shares for 2025 to December 16 were Sibanye Stillwater (276.23%), AngloGold Ashanti (236.69%), Northam Platinum (220.28%), Goldfields (199.47%) and Impala Platinum (160.51%), according to data from ProfileData. Global diversified miners BHP and Glencore were not among the standouts, achieving just 7.47% and 2.67% for the year respectively.

Performance on the rest of the JSE was comparatively modest, with the Financial 15 Index at 17.60% to December 16 and the Industrial 25 Index at 14.33%. Top-40 losers for the year to date include Bidvest (-13.59%), Shoprite (-9.30%), Pepcor (-8.98%), Clicks (-8.87%) and Nedbank (-7.81%).

Bianca Botes, advisory partner and global director at Citadel, notes that gold was the “undisputed champion of 2025”.

“The precious metal surged roughly 60%, reaching an all-time high of $4 379 per ounce in October, marking its best annual performance in 46 years. A US Federal Reserve rate cut journey, persistent central bank buying of gold, geopolitical uncertainty, and inflation hedging demand combined to propel the yellow metal to levels few predicted,” Botes says.

“As 2025 draws to a close, markets face an uncertain landscape. Trade policy remains unpredictable, AI spending sustainability is under scrutiny, and geopolitical tensions show no signs of abating. Yet the year’s winners – gold, select equities, and reform-minded emerging markets like South Africa – have demonstrated that opportunities persist for those who navigate volatility thoughtfully. The foundation has been laid; 2026 will test whether it holds,” she says.

Fund managers Shaun le Roux and Mikhail Motala of PSG Asset Management say global events in 2025 strongly favoured what South Africa has to offer.

“Real assets and precious metals typically fare well in more inflationary environments, while emerging markets benefit from weaker dollar cycles. We believe these equities are especially well positioned to reward investors into the future, as they are currently deeply out of favour and trading at far less rich valuations than their popular counterparts,” they say. 

What is concerning, Le Roux and Motala say, is that many investors’ portfolios have a disproportionate weighting to the US. “This is partly a reflection of the exceptional returns US shares have delivered over the past few years. South African investors not only bought into the ‘US exceptionalism’ narrative,  but have also tended towards being conservative in their allocation to local assets, seeing SA equities as ‘risky’ because of pessimism towards the local economic and political landscape,” they say.

“While no-one knows what the emerging global world order will ultimately look like, investors should be worried about continued positioning into some of the most expensive and crowded parts of the US markets, as it is highly unlikely that the hype will be matched by economics in the long run,” Le Roux and Motala say.

They say that, despite their strong rally from a relatively low base, local shares continue to look attractive going into 2026. The PE ratio of the S&P 500 is currently 27.5, while that of the JSE has risen to 14.5, according to World PE Ratio.