Waking up at the end of September brought the end to the third quarter of 2023, and the (not so) Green Days of Satrix 40 ETF performance. Let's look at what happened in the third quarter of 2023.
So how did the Satrix Top 40 ETF do?
The third quarter of 2023 was not the greatest for the top 40 companies on the JSE as 23 of the top 40 companies were in the red. This was due to elevated interest rates, rail issues and continuous load shedding, resulting in a decrease in performance across most sectors.
At the end of the third quarter of 2023 (July-September), the Satrix 40 ETF closed at R67.50. That's a 5% decrease on the previous quarter (R71.27). The decrease was not specifically sector specific however the mining sector in particular continued to disappoint. The decline this quarter has resulted in the Satrix 40 ETF being in the red in 2023 as a whole, as year to date (January-September) the Satrix 40 ETF is down 1.7% from a price of R68.68.
Let’s look at the performance of some of these individual companies’ shares within the fund to understand the decrease.
Sasol was one of the seventeen in the green this quarter as their share price increased just shy of 12% from R233.26 to R261.02. This was due to the energy giant showing improvements in operations and business performance. Higher production volumes were reached due increased availability of natural gas thus surpassing half year targets.
Sanlam also had an impressive quarter with gains of 12.5% from R58.35 to R65.67, which is 27% up from the same time last year. This impressive share performance was due to impressive interim half year results, with profitability being the stand out. Recent transactions with the likes of ABSA, AlexForbes and Allianz all contributed to earnings and new business development growth over the period. This was certainly a triple A performance from the life insurance company, who seems to have finally gained some life post pandemic.
However the biggest winner this quarter was OUTsurance, who’s share price increased in excess of 25% from R33.99 to R42.76. This is up 46% from September 2022. This was due to the insurance group, which took over the listing of its former parent Rand Merchant Investment Holdings (RMI) in late 2022, reporting earnings growth of 62%, in which operating profit increased by 41%. Furthermore the total dividend payout for 2023 doubled compared to that of last year. This ensured that shareholder’s got more than just something out.
Other big winners
The third quarter has been mostly kind for the banking sector as the likes of Capitec, Investec, ABSA and Standard Bank were all in the green. Capitec experienced growth just shy of 10% this quarter as their share price increased from R1567.78 to R1716.33, which is 10.5% up from the same time last year (R1553). Investec’s share price increased from R106.38 to R111.17 (+4.4%) this quarter, this is up 54% compared to September 2022 (R72.37). ABSA also experienced good gains as their share price increased from R167.91 to R174.83 (+4%). Furthermore, Standard Bank share price grew 3.5% this quarter (from R177.55 to R183.72) and 28% year on year (R144).
Another big winner this quarter was Mondi Plc. Despite the lower demand and lower prices for the paper producer, their share price increased 9.65% from R288.50 to R316.35 and is up 12.75% compared to September 2022 (R280.57). This was due to Mondi adopting a new strategy to ensure sustainability in a volatile global market. This strategy included upgrading its existing paper mills and numerous expansion projects. Maybe money does grow on trees?
Mining companies suffered again this quarter as Amplats (-17%), Implats (-21%), Goldfields (-22%) and AngloGold (-23%) all were in the red this quarter. These poor performances are due to poor interim results. This stemmed from lower production levels due to loadshedding and a decrease in logistics capabilities due to the rail issues of Transnet. The Mining and Precious Metals Companies continue to be buried and barely alive in 2023.
Naspers and Prosus, in which Naspers owns a majority stake, were both down this quarter as Naspers’ share price dropped from R3399 to R3025.55 (-12%) and Prosus from R632.20 to R558 (-11%) . This is partly due to the sudden exit of their CEO, but also due to the underwhelming performance of Tencent, in which Nasper’s holds 29%.
Richemont, who was the JSE’s top performer at the halfway mark of 2023, experienced the biggest decline this quarter as their share price fell 28% from R3205.52 to R2319.24. This was due to a continued decrease in global sales, but especially in an inflation-hit European market. However it is not all doom and gloom for the luxury goods group as shares are still up 35.5% from September 2022.
Meanwhile, MTN’s ongoing dispute with IHS (South Africa's largest independent tower operator) resulted in the telecommunications company’s share price falling 18% this quarter from R138.15 to R112.85.
2023: Sad September, Optimistic October
It is important to remember that various factors may influence the performance of the market and thus the longer you remain invested the better the chances of a positive return. Historically, on average, the worst market returns are in September. So with September being behind us, hopefully history has repeated itself and the final quarter sees plenty of green and gold (Go Bokke & Proteas!).