Satrix Top 40 Company Performance Update: How Has the Local Market Been Doing?

Keval Maharaj -

The second quarter of the year is already behind us and we’ve passed the halfway mark of 2024. Despite a tricky start to the year, we saw some record highs for the Satrix Top 40 companies. Let's review this and unpack the record-setting performance in the second quarter of 2024.

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What’s the Satrix Top 40? The Satrix Top 40 ETF is an index-tracking fund that follows the performance of the 40 biggest companies on the Johannesburg Stock Exchange (JSE). It’s also the Local Equity Fund you can invest in through Franc.

So how did the Satrix Top 40 ETF perform?

From April to June 2024, the performance of the majority of the top 40 companies on the JSE was in the green. At the end of the second quarter of 2024, the Satrix Top 40 ETF closed at R74.35, a 7.8% increase on the previous quarter (R68.94) and a 4% month-on-month increase from the end of May 2024 (R71.50).

Satrix Top 40 top performers in Q2 2024

  1. Capitec
  2. FirstRand
  3. Anglo American Platinum
  4. South32
  5. Sanlam
  6. Standard Bank

The biggest winners this quarter were definitely the banks. Capitec share price increased 25% due to several factors, most of which are a result of their positive financial performance. Capitec reported robust earnings for the first half of 2024 – a significant increase from 2023. Furthermore Capitec declared a substantial interim dividend of R39.40 per share, which is an appealing incentive for investors seeking returns through dividends. This solid financial performance and dividend declaration, in addition to positive market sentiment – with revenue and earnings forecasted to continue growing – likely bolstered investor confidence and contributed to the share price rise​.

FirstRand also blossomed this quarter as their share price increased by 25%. FirstRand reported robust financial results, with significant growth in net income. This positive financial performance, as well as newly implemented strategic initiatives and appointments to key leadership positions, boosted investor confidence and contributed to the rise in share price​.

Another big winner in the banking sector was Standard Bank, with their share price increasing 14% this quarter. Similarly to Capitec and FirstRand, the bank reported a solid performance in FY2023, with a significant increase in earnings. This growth was driven by strategic expansion in African regions and a significant rise in digital transactions​. There was also notable growth in the bank's digital retail clients in South Africa.

Moving away from the banking sector, South32, the globally diversified mining and metals company, experienced significant gains this quarter as its share price increased by 21%. The prices of commodities, particularly those that South32 is heavily involved in, such as aluminium and base metals, began to recover after a period of decline. South32 also maintained its production guidance for the financial year ending February 2024 and announced a 7% increase in production volumes. This – along with the commodity price increase – boosted investor confidence and increased the demand for South32 shares​, resulting in the share price increase.

The share price of another mining giant, Anglo American, increased by 24% in the second quarter of 2024. This can be attributed to several positive developments, including rumours and speculation about a potential takeover bid by BHP, which boosted investor confidence and interest in Anglo American's stock. Anglo American's strategic focus on operational efficiencies and cost management contributed to better-than-expected financial performance, which was well received by the market.

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The possibility of a merger or acquisition often leads to an increase in share price as investors anticipate a premium offer​.

Rounding up the big winners this quarter was Sanlam, whose share price increased 17%. Continuing the trend, this was due to Sanlam’s strong financial performance, in which increases in earnings and business volumes contributed to an overall positive performance, and the rise in share price.

Satrix Top 40 bottom performers in Q2 2024

  1. AMPLATS
  2. Gold Fields
  3. MTN
  4. Sibanye Stillwater
  5. AB InBev
  6. BIDCORP

Anglo American Platinum (AMPLATS) were the biggest losers this quarter as its share price experienced a significant drop (-22%). This was primarily due to a sharp decline in platinum group metals (PGM) prices, the lowest level in four years, which severely impacted its financial performance. This decline in PGM prices led to a substantial decrease in headline earnings, which were down 71% compared to the previous year. Additionally, the company announced a restructuring process that could potentially affect over 4,000 jobs. This move was part of their efforts to manage the downturn in the market and reposition the business amidst the falling revenues and higher operational costs.

GoldFields' share price fell by 10% in the second quarter of 2024 primarily due to their operations in South America. One major issue was the severe winter weather in Chile, which led the company to cut its production guidance. Additionally, there were concerns over potential environmental impacts on the Salares Norte project in northern Chile, specifically related to rare chinchillas in the area, which threatened their mining licence. These challenges, combined with broader market conditions affecting gold prices, contributed to the decline in their share price​. Chilly times for the gold miners.

MTN's tricky start to 2024 continues as its share price fell 9% this quarter.

This was due to the telecommunications giant facing significant regulatory challenges in its key markets, particularly in Nigeria. The company struggled with complex regulations and fines, impacting investor confidence​​. The overall economic conditions in South Africa and other markets where MTN operates weren’t favourable either: economic slowdowns and high inflation rates contributed to weaker consumer spending and lower revenues. MTN also experienced operational difficulties, including network outages and increased operational costs, which affected the company's performance and profitability. MTN’s share price is now down 27% in 2024.

Sibanye Stillwater's share price has also been in the red since the start of 2024, with a further slide-down of 9% this quarter. Similarly to AMPLATS, this decline can be attributed to the significant drop in PGMs prices, which negatively impacted the company's profitability. Additionally, the company faced operational challenges, including the potential halting of operations at its Montana mine due to depressed palladium prices. The financial strain was further compounded by rising costs and lower-than-expected earnings. ​

Another company in the red was AB InBev, the multinational drink and brewing company, as their share price experienced a significant decline of 8% in the second quarter. The most notable reason was the ongoing impact of the Bud Light boycott, a key product of AB InBev. This boycott originated from a controversial marketing campaign featuring a transgender influencer, which sparked backlash from some conservative consumers. The negative sentiment led to a steep decline in Bud Light sales, a nearly 30% year-on-year drop by late May 2024. Consequently, this decrease in sales adversely affected AB InBev's overall financial performance, which is further compounded by high debt levels, which are not well-covered by its operating cash flow.

Rounding up the bottom performers were BidCorp, the international broad-line foodservice group, as its share price fell 8% in the second quarter of 2024. One major reason was the underwhelming market reaction to their financial performance and guidance for the year. Despite announcing a dividend and showing positive earnings growth, the company faced concerns over its revenue growth and market conditions. There was also significant insider selling, including the CEO and Executive Director selling a substantial amount of stock, which often signals potential issues or lack of confidence in future performance​​. Additionally, inflationary pressures and fluctuations in consumer spending also played a role in impacting the company's stock performance during this period.

Onwards and Upwards

Despite a nervous start to 2024 for the Satrix Top 40, the fund has found some momentum going into the second half of the year, as June saw a new record high.

It’s important to remember that various factors may influence the performance of the market and the longer you remain invested, the better the chances of a positive return (as seen in the graph below).