South Africa's Top 40 Cash Index Rebalancing

It should come as no surprise that global retailer Steinhoff International falls far out of the Top 40 Index to an exchange ranking of 77 following the realisation of irregular accounting practices within the group late last year.

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The 19th of March 2018 will see the JSE Top 40 Cash Index (J200) rebalanced, as is the case on the third week of the last month in each quarter (March, June, September and December). Companies which are to be excluded from an index can often find some selling pressure manifesting before and after the rebalancing as funds tracking these indices rebalance as well. Inversely some buying of new inclusions into an index can also be a result of funds tracking the rebalance as well. The degree to which this may already occurred is uncertain.

 It should be noted that IG’s South Africa 40 tradeable indices find their respective pricings from the underlying near dated Futures contracts of the All Share Top 40 index, with the cash product arrived at by a fair value adjustment on a daily basis.

New inclusions for the Top40 Cash Index

A strengthening rand has bode well for local retailers which have outperformed the broader market this year so far. As such, The Foschini Group, Truworths International Limited and The Spar Group will find inclusion in the Top 40 index at a ranking of 30, 31 and 35 respectively.

Also within the broader industrial sector, Imperial Holdings will find inclusion into the index at position number 33. Recent results have shown the group to have achieved record revenue and headline earnings per share growth of 16% in the 1H17.

Exclusions form the Top40 Cash Index

Listed Real Estate Investment Trust (REIT) companies have been under pressure this quarter with initial losses a contagion effect from the aggressive selloff seen on Resilient Property. This was initially due to speculation that sell side research house, Viceroy, may have been targeting the company in what was then an upcoming report.  Resilient was not to be the outcome of the report, however the company’s results which followed left investors unappeased and questions remain around the company’s accounting practices. Resilient holds around 16% of Fortress Reit equity, and both companies have partnerships with broad-based black economic empowerment (B-BBEE) partner Siyakha Education Trust.

The declines in market capitalisation sees both Fortress REIT Ltd A (Fortress REIT B share) and Resilient Property to be excluded from the Top40 index to rankings of 45 and 55 respectively. Inward listing, Intu Properties, is another casualty of recent declines dropping to an index ranking of 55.

It should come as no surprise that global retailer Steinhoff International falls far out of the Top 40 Index to an exchange ranking of 77 following the realisation of irregular accounting practices within the group late last year.

The Top 40 companies in terms of inclusion into the rebalanced index is as follows:

Ranking Ticker Company
1 NPN Naspers Ltd -N-
2 CFR Compagnie Fin Richemont
3 BIL BHP Billiton plc
4 AGL Anglo American plc
5 SBK Standard Bank Group Ltd
6 FSR FirstRand Ltd
7 MTN MTN Group Ltd
8 SOL Sasol Limited
9 OML Old Mutual plc
10 BTI British American Tobacco PLC
11 SLM Sanlam Limited
12 MNP Mondi plc
  MND Mondi Ltd
13 BGA Barclays Africa Grp Ltd
14 REM Remgro Ltd
15 SHP Shoprite Holdings Ltd
16 APN Aspen Pharmacare Hldgs Ltd
17 VOD Vodacom Group Ltd
18 INP Investec plc
  INL Investec Ltd
19 BID BID Corporation Ltd
20 BVT Bidvest Ltd
21 GRT Growthpoint Prop Ltd
22 TBS Tiger Brands Ltd
23 MRP Mr Price Group Ltd
24 WHL Woolworths Holdings Ltd
25 NED Nedbank Group Ltd
26 DSY Discovery Ltd
27 RDF Redefine Properties Ltd
28 RMH RMB Holdings Ltd
29 ANG AngloGold Ashanti Ltd
30 TFG The Foschini Group Limited
31 TRU Truworths Int Ltd
32 SAP Sappi Ltd
33 IPL Imperial Holdings Ltd
34 CPI Capitec Bank Hldgs Ltd
35 SPP The Spar Group Ltd
36 CLS Clicks Group Ltd
37 GFI Gold Fields Ltd
38 BAW Barloworld Ltd
39 LHC Life Healthcare Grp Hldgs Ltd
40 AVI AVI Ltd

 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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