Big winner between the S&P 500 and JSE All Share Index in 2024

An analysis by Daily Investor revealed that the S&P 500 Index comfortably outperformed the JSE All Share Index in 2024 year-to-date.

The Standard and Poor’s 500, better known as the S&P 500, tracks the stock performance of 500 of the largest companies listed on US stock exchanges.

The JSE All-Share Index (ALSI) comprises the largest listed companies on the JSE and accounts for almost 100% of the exchange’s market cap and liquidity.

There is an ongoing debate on whether investing in local or international equities will offer the best returns, especially with the more positive sentiment towards South Africa.

Last year, South Africa was not a good place to invest. The currency weakened by 9% against the US dollar, and the JSE ALSI had a disappointing return of -3.2%.

This year, it reversed the trend. The rand traded much stronger, and the JSE ALSI returned 8.5% year-to-date.

The stronger currency and improved equity market resulted from a positive general election outcome and an end to load-shedding.

Eskom’s improved performance significantly improved South Africa’s economic outlook, improving investor sentiment.

The Government of National Unity (GNU), which is essentially a coalition between the ANC and the DA, along with other minor parties, was also well-received by the investment community.

In the two days following the official announcement of the GNU’s formation, the JSE ALSI rallied by almost 5%.

However, despite the JSE ALSI’s relatively strong performance in 2024, it still significantly underperformed the S&P 500 index.

Considering the dollar weakening against the rand, the S&P 500 returned 21.8% year-to-date. In US dollar terms, the S&P 500 returned 24.8%.

During the year, all the attention was focused on the 2024 US elections, which saw Donald Trump win overwhelmingly.

When Trump returns to the White House in January, the Republican party will control the Senate and the House of Representatives.

The US election results were met with significant market positivity. The S&P 500 rallied by around 5% in the days following the election, and the dollar strengthened.

It raises the question of whether it was better to invest in South Africa or the United States in 2024.

• A R100 investment in the JSE ALSI at the beginning of the year would return R108.5 in 2024 year-to-date.
• A R100 invested in the S&P 500 index would return R121.8 in rand terms in 2024 year-to-date.

The chart below shows how the S&P 500 index outperformed the JSE ALSI index in 2024 year-to-date.