It seems to me that our market is no longer tracking the Dow since the last week or so. The Dow will go down and our top 40 still goes up. An article was published on moneyweb stating that significant foreign inflows have returned to emerging markets.Oh and don't forget about the other idiots who stare blindly at the returns of the last year and think it is still a good time to enter the market. If you consider the overall P/E ratio of our equities a significant correction is surely on the cards. A lot of people are going to burn bad!
Theres no reason that we should always be correlated to the US. Often there are times when emerging markets are flavour of the month and developed are out, then we go up they go down, other times vica versa happens, and then finally about 50% of the time we do follow the other.
I see with the earnings coming in this week though, yes PE ratios are back at ATH, weve only been this high 5 times in 70 years. (20 PE)
I dont think theres a person in this world that can say ALSI is cheap on current earnings, theyre arguement however is that theres nowhere better to put your money as markets just go up and forward earnings will be better (Like those who bought twitter @ 100 PE saying its a growth company). So if you believe earnings will go up next year then by all means please buy more, as there are two parts to the PE formulae.
well, just look at the business case for a foreign investor - sure we have high PE's - but that is the norm on US markets. And they get the stocks at a discount thanks to rand weakness. And then the kicker - the real kicker - is that African markets are growing at rates of 5-8% GDP. The JSE is realistically the only exchange that can give you African market exposure. If I was a US investor, I would be more concerned about currency risk, but with the rand at uncharacteristic highs, seems you have a better chance of that working in your favour.
in dollar terms the growth in ALSI has been negative, so Im not too sure if foreign investors are happy with JSE. I do agree with you though, SA is the best way into Africa...unless of course Nigeria overtakes us.