The Johannesburg stock exchange (JSE) returns, political development and economic forces: a historical perspective

Abstract

To contribute to economic growth and development a stock market, as a leading economic indicator, should reflect the macroeconomic fundamentals of a country. The reflection of political and economic development in the returns of companies listed on a stock market indicates the risk profile of specific companies and the stock exchange. The objective of this article is to provide a historical perspective on how political and economic developments have been reflected in the returns of the JSE. The history of the JSE was divided into the following broad time periods of roughly similar economic and political developments: 1887-World War II; World War II-1960; and 1960-1990/94. The study concluded that the JSE reflected dramatic macroeconomic conditions, policy changes and political events.