Top 5 South Africa Stocks to Watch 2024
South Africa is among the leading economies on the African continent. It is also part of the BRICS group of countries that are making the news as of late.
Have you considered trading South Africa stocks? What are some of the best South Africa stocks to watch in 2024?
BRICS (Brazil, Russia, India, China, and South Africa) countries make up a significant chunk of the world’s GDP, they represent very large populations, and they have plenty of natural resources collectively.
BRICS countries are also at the forefront of an economic and geopolitical shift that is currently playing out in the world. Therefore, it makes sense to closely watch the economies and the stocks in these countries.
In this article we will review some of the best South African stocks to watch, the advantages and disadvantages of the author’s subjective list, the state of the South African economy and more.
Table of Contents
JSE: The South African Stock Exchange
The JSE or the JSE Securities Exchange is the largest stock exchange in South Africa. JSE stands for the Johannesburg Stock Exchange and it is located in the city of Johannesburg, South Africa.
The JSE is consistently ranked among the 20 largest stock exchanges in the world. It is an important exchange for global traders and investors because the JSE serves as a gateway for them to participate in one of Africa’s powerhouse economies.
There are over 400 companies listed on the JSE. By index weight, basic resources, consumer products, and banking are the top 3 sectors. They are followed by the technology and personal care pharmaceuticals/grocery industries.
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How Does the South African Economy Work?
It has been a difficult year for the South African economy. It contracted by 1.3% in the fourth quarter of 2022. The forecast for 2023 is a mere 0.2%.
Energy supply is a key concern for South Africa at the moment. The country has been regularly experiencing load shedding affecting consumers and businesses.
Commodity prices matter a lot for the South African economy due to its natural resource economy. Mining is one of the driving sectors of the South African economy.
The near-term future outlook of the South African economy depends on how global trade performs and whether a rebound in the Chinese economy lifts the demand for commodities.
What could be considered some of the top South Africa stocks to watch? Keep reading to find out more.
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Top 5 South African Stocks to Watch
Now that the overall economic environment for South Africa has been laid out, let us look at the top 5 best South Africa stocks to watch from the JSE which could be worth tracking.
1. Mondi PLC
Mondi is a multinational packaging and paper conglomerate. It is vertically integrated across the paper and packaging value chain.
Mondi grows the wood used to manufacture pulp. It also processes the pulp to make paper sheets. These sheets are then used to make end products like corrugated boxes, industrial bags, and other packaging products.
Advantages:
- Mondi has production sites in 30 countries including South Africa, Europe, Russia, and North America. Mondi’s strong research and innovation track record helps it stay competitive.
- The recent climate-related trends like ESG and COP declarations create opportunities to bring environmentally friendly packaging solutions. Mondi recently unveiled its environmentally friendly single-use Styrofoam product called StyroPack.
Disadvantages:
- However, high inflation and a possible recession could prove to be problematic for Mondi. The load-shedding situation in South Africa also isn’t helping.
- Mondi also operates in a highly competitive industry. Margins are already thin and any adverse developments on the competitive side could be a problem for the company.
2. Glencore plc
Glencore is a Swiss mining company that trades on the JSE. It is known for being a large miner of coal, cobalt, nickel, and ferroalloys. Glencore is also one of the largest commodity traders in the world.
Glencore produces and markets over 60 commodities and has over 150 assets across the world. This also includes oil and gas. So, Glencore’s business is closely linked with commodity prices.
The near-term outlook for Glencore depends much on how large economies like India and China perform amidst bearish sentiment in the developed world.
Advantages:
- The biggest strength of Glencore is its scale and presence. Being such a large business, Glencore enjoys economies of scale and is able to capture maximum value by being vertically integrated.
- Glencore’s diverse geographical presence gives it access to mines and reserves that ensure a steady supply of raw materials for its operations and for marketing the end products.
Disadvantages:
- However, any recessionary trends may negatively impact commodity prices.
- Additionally, there are potential issues for any fossil fuel-focused business due to climate change and the increasing importance of ESG (Environmental Social Governance) factors.
3. BHP Billiton Ltd
BHP Billiton is a mining giant from Australia. However, its stock also trades on the JSE. BHP Billiton is among the 100 largest companies in the world. In fact, it is the largest mining company in the world and the largest company in Australia.
BHP Billiton is one of the world’s largest producers of iron ore, a key raw material used in steel production. BHP also produces significant quantities of copper and coal. The company has an oil and gas division as well.
Advantages:
- Due to its size, BHP Billiton enjoys the benefits of scale, financial strength, and diversification. It has a strong balance sheet that helps it ride out cyclical trends common in the mining business.
- BHP Billiton is also a strong technological innovator and can develop environmentally friendly technologies, something important in an era of ESG.
Disadvantages:
- Climate change trends are also a challenge to a business focused on fossil fuels. BHP is exposed to any sudden or significant regulatory changes in what is mined and how it is mined.
- BHP can also be affected by geopolitical developments. For example, a trade war between Australia and China can affect iron ore exports.
4. Anglo American plc
Anglo American PLC is a British mining company that is responsible for producing 40% of the world’s platinum. South Africa, meanwhile, is the world’s largest producer of platinum.
No wonder Anglo American is listed on the LSE and the JSE. Speaking of the South African connection, Anglo American is also a major producer of diamonds, something that South Africa is known for.
Advantages:
- The fact that Anglo American deals in multiple minerals in multiple geographies protects it from adverse trends in a particular sub-market.
- The size of Anglo American also gives it financial strength and economies of scale to compete well in a difficult industry.
Disadvantages:
- However, the mining business has to evolve in a world where climate change and ESG are at the forefront, given that mining is an industry which affects climate change and the environment directly.
- Additionally, an economic slowdown and a fall in commodity prices can also adversely impact a mining business like Anglo American.
5. Sasol Ltd
Sasol Ltd is a chemicals and energy company based out of South Africa. Sasol employs more than 33,000 employees and is one of the largest corporate taxpayers in South Africa.
Sasol is also the seventh-largest coal mining company in the world. Sasol produces low-carbon electricity, chemicals, and liquid fuels.
Advantages:
- Sasol is the operator of the world’s only synthetic fuels plant, converting coal and gas into liquid fuels.
- Sasol benefits from being in multiple markets and multiple geographies. It is also a leading innovator and has developed technologies to convert coal and gas into liquid fuels.
Disadvantages:
- However, Sasol is subject to price volatility in the commodity markets.
- The ongoing issues related to power and inflation in South Africa are also issues that Sasol must face.
Top 5 Best Stocks to Watch South Africa: Conclusion
Now that there is a deeper understanding of the South African economy, the JSE and the potential top 5 best South Africa stocks to watch, what are your thoughts on our subjective analysis?
By now, you will have a basic idea of where the South African economy is, what are its key sectors, and how the business models of some of the top South African stocks work.
If you feel confident about trading stocks, like the ones we discussed above, then feel free to open an account with Admirals. The registration process is simple, and you get access to a range of indices, CFDs, and tradeable assets.
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