What happened
September punched a hole in Johannesburg equities. The FTSE/JSE Africa All-Share fell 6.7% for the month, trimming the index's value by over 1.61 trillion rand, or roughly $97 billion, based on Bloomberg data. The 14 day relative strength index slipped under 30 this week, a threshold it had not breached since April last year and a sign for some chart watchers that selling may have gone too far.
Last time it fell through 30, the market went on to climb 57% over 11 months before that run ended with the outbreak of the Iran war. By 2:14 p.m. in Johannesburg on Friday, the benchmark had swung from being down as much as 1.5% to showing a 0.3% gain.
Why it sold off
South African shares have lagged other emerging markets as higher crude and weaker metal prices hurt the nation's trade dynamics. The slump in bullion and platinum fed directly into local miners, which slid more than 17% for the month. Broader weakness in metals alongside costlier energy has weighed on sentiment, compounding the technical downdraft.
What to watch next
He also pointed to China's growth as a swing factor, given it is the biggest buyer of South African commodities, and noted that Naspers Ltd. remains closely tied to Tencent Holdings Ltd., where it owns a 23% stake. "The selling looks driven by sentiment and flows rather than fundamentals, as earnings expectations have held up far better than share prices," he said. "A technical bounce is likely, but a lasting recovery depends on the dollar, gold and China." According to Robert Naess of Nordea Investment Management, sustaining the rebound would additionally require the dollar to weaken and real yields to fall in order to support gold.
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