What you need to know about the JSE all share index
For traders seeking alternative investment options in emerging markets, the JSE all share index (ALSI) offers some of the best growth opportunities in the current market climate.
In fact, the JSE (Johannesburg Stock Exchange) is the oldest and largest stock exchange in the African continent and can also provide useful insights into the economy of South Africa.
What is the JSE all share index?
The JSE all share index is an collection of the largest and best-performing companies listed on the JSE. 164 companies in a variety of different industries including, mining, finance, construction, food and energy make up the all share index.
The country of South Africa is particularly rich in precious metals such as gold and platinum and the economy has been on the receiving end of foreign investment thanks to the efficiency of its mining companies. BHP Billiton, Glencore and Anglo American are some of the most valuable equities included in the all share index.
While the JSE has been turbulent in recent years, the JSE all share index has witnessed exceptional growth in 2019 – surging by almost 10% to the upside. Since this index consists of the top companies listed in the JSE, it’s a valid indicator of the strength of the South African stock market.
What affects the JSE all share price?
Traders who are interested in the opportunities available in the South African economy can make forecasts on the future performance of the JSE all share index and profit by its movements.
However, the financial markets are vulnerable to several external factors such as global unrest, political developments and trade agreements and therefore making accurate predictions is quite challenging.
If you want to trade the JSE all share, you need to consider various economic indicators such as the monetary policy of the South African Reserve Bank and its interest rate decisions which are crucial in determining the future direction of both the national currency and the stock market.
In general, while the interest rates set by the Bank remain low, the buyers have more interest in buying stocks and the price of the JSE all share goes up. On the other hand, if the Bank decides to raise interest rates, investments will be seen as costly and therefore demand will start to die down as well as the value of the JSE all share index.
Another good metric in gauging future performance is to research the underlying companies that compose in the index. If the individual companies on the JSE all share index are performing well, investors will buy more stock and the value of the index will go up overall.
Conversely, if some of the largest companies of the index are perceived to underperforming then stockholders will start selling their stock to minimize their losses and therefore the price will start dropping as well due to the increased supply.
Political developments in the region and across the world may also have a substantial impact on the performance of the JSE all share as they may affect the regulatory landscape under which businesses perform their operations.
Trading the JSE all share index
If you wish to profit from the price fluctuations of the JSE all share index, you first need to open an account with a reputable broker that includes the index in its offering of tradable instruments.
Through the broker’s trading platform, you will be able to monitor the performance of the index, as well as hundreds of other indices, stocks and currency pairs and place your buy or sell orders as you see fit.
Opening an account is free of charge, but a minimum deposit is typically required to activate the account and trade live. In the meantime, you will be able to download the trading platform and trade using a demo account with virtual money to familiarize yourself with how everything works.
CM Trading is the largest broker in South Africa and one of the best-performing brokers in the region.
If you wish trade indices, forex or stocks with our award-winning services and enjoy personal guidance from our trading specialists, open your account below.