The JSE All Share Index is a financial index weighted by market capitalization. It comprises 600 of more than 2 000 companies traded on the London Stock Exchange. The JSE All Share Index represents 99 percent pre free-float of the full market cap value of all eligible securities listed on the Main Board of the Johannesburg Stock Exchange (JSE).
In this in-depth guide youโll learn:
- Definition of FTSE/JSE All Share Index
- Details of JSE All Share Index
- Why trade the JSE All Share Index?
- What is the JSE All Share Index?
- What is an index value?
- Are there other JSE indexes?
- Reasons to trade the JSE All Star Index
- Pros and Cons of JSE All Share Index
- Details on how the JSE All Share Index Calculated
- Various FTSE/JSE Indexes available
- Detailed JSE All Share Index graph
- JSE All Share vs S&P 500 Index (S&P)
And lots moreโฆ
Letโs dive right inโฆ
Definition of FTSE/JSE All Share Index
The FTSE/JSE All Share Index is a collaborative effort orchestrated by the Financial Times Stock Exchange (FTSE) and the Johannesburg Stock Exchange (JSE). Now known as FTSE Russell Group, the British financial organization specializes in providing index offerings for the global financial markets.
The FTSE Russell Group combines its world-class multi-asset capabilities with the regional expertise of the JSE in Africa to offer a diverse range of FTSE/JSE equity and fixed income indexes. The indexes are designed to represent the sentiment of both domestic and international investors.
The JSE is the largest stock exchange in Africa and one of the top 20 exchanges in the world in terms of market capitalization. As of August 2020, the market capitalization of the JSE was at US$1,005 billion.
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Details of JSE All Share Index
| ๐ ๐๐ฒ๐ฎ๐๐๐ฟ๐ฒ๐ | ๐ฅ ๐๐ฒ๐๐ฎ๐ถ๐น๐ |
|---|---|
| ๐Index code | J203 |
| ๐Alpha code | ALSH |
| ๐ Index category | Headline |
| ๐Universe | Ordinary shares listed on the JSE Main Board |
| ๐Fixed number of companies | No |
| ๐ Liquidity screening | Yes |
| ๐ Weighting methodology | Free float market cap weighted |
| ๐ Ranking methodology | Ranked by gross market cap |
Reasons to trade the JSE All Star Index
โก๏ธ๏ธIndexes like the JSE All-Star Index provide traders and investors with an easy way to monitor the overall health of a market in a particular jurisdiction. You can gauge the current state of a market by tracking one statistical measurement.
โก๏ธ๏ธThe historical data of index prices and movement also provide investors with insight into how a market has reacted to specific events in the past. This helps investors make better decisions when buying and selling shares in companies.
โก๏ธ๏ธMost index funds are tracked in a passive manner to gauge market sentiment or theyโre traded as Exchange Traded Funds (ETFs). Index ETFs typically offer the lowest fees because there is no active management. Many investors include Index ETFs as a portion of their portfolio.
Pros and Cons of JSE All Share Index
| โ Pros | โCons |
|---|---|
| Includes a wide range of companies from various sectors of the South African economy. | Heavily weighted toward a few dominant companies, such as Naspers and Richemont. |
| Serves as a benchmark for investors and fund managers to measure the performance of their portfolios | Foreign investors, investing in the JSE All Share Index exposes them to currency risk because returns are in South African rand (ZAR). |
| Changes in the index can be used as an indicator of the overall health of the South African economy | Doesn't provide exposure to global markets. |
| Has a long history, which means there is a wealth of historical data available for analysis. | Political and economic volatility, which can affect the performance of companies listed on the JSE |
| Companies included in the index are highly liquid, making it easy for investors to buy and sell shares. |
Details on how the JSE All Share Index Calculated
โ The market value for each stock is calculated by multiplying its price by the number of shares included in the index, and each stockโs weight in the index is determined based on its market value relevant to the total market value of the index.
โ Stock A, for example, has a share price of $3, and there are 50 shares of this stock in the index, so its market value is $150 ($3 X 50 shares = $150).
โ The total market value of every stock in the index is $970, so Stock Aโs weight, or representation within the index is 15% ($150 / $970 = 15%).
โ When an index is first created, a starting (base) value is chosen. In our example, we will use 100 as the base value. Now that we have the total market value of our index and our base value, the next step is to determine the index divisor by dividing the total market value of the index by the base index value of 100 ($970 / 100 = 9.7).
โ Each day, as the market values of the stocks in the index fluctuate based on changes to their prices, the new total market value of the index is divided by the same divisor (9.7) to produce a new index value.
โ The divisor remains constant until the index constituency changes. For example, if a stock is delisted or a stock split occurs, the divisor will be recalculated to be reflective of the new index membership.
Various FTSE/JSE Indexes
There are three other indexes which have been launched under the FTSE/JSE Africa Indexes partnership.
The four FTSE/JSE Africa Indexes are:
| ๐๐ง๐ฆ๐/๐๐ฆ๐ ๐๐ณ๐ฟ๐ถ๐ฐ๐ฎ ๐๐ป๐ฑ๐ฒ๐ ๐ฒ๐ | ๐๐ป๐ณ๐ผ๐ฟ๐บ๐ฎ๐๐ถ๐ผ๐ป |
|---|---|
| ๐ FTSE/JSE Africa Indexes | The FTSE/JSE Africa Index Series represents the South African equity market and its market segments. Market capitalization-weighted and alternatively-weighted indexes are available, including equally-weighted, shareholder-weighted, and capped indexes. The FTSE/JSE Africa Index Series replaced the JSE Actuaries indices in June 2002. |
| ๐ FTSE/JSE Responsible Investment Index Series | The FTSE/JSE Responsible Investment Index Series represents South African companies meeting ESG (Environmental, Social, and Governance) criteria as defined by the FTSE ESG Model. Companies in the FTSE All World Index that are also included in the FTSE/JSE Shareholder-Weighted All Share Index are eligible for inclusion, subject to criteria based on the FTSE ESG Model. |
| ๐ป FTSE/JSE Fixed Income Index Series | The FTSE/JSE Fixed Income Index Series represents the performance of South African bonds. The series includes the FTSE/JSE All Bond Index (ALBI), which comprises the top 20 conventional-listed โvanillaโ bonds with fixed, semi-annual coupons and the FTSE/JSE Inflation-Linked Index (CILI). A comprehensive range of sector and maturity sub-indexes are available for both the ALBI and CILI. |
| ๐ FTSE/JSE Multi-Asset Composite Index Series | The FTSE/JSE Multi-Asset Composite Index Series is a range of fully integrated multi-asset benchmarks designed to provide broad measures of cross-asset market performance. The series includes a set of indexes covering different local and global asset classes; including South African equity, fixed income, and property, as well as versions that include global equity and fixed income exposures. The indexes are designed to meet local market regulatory frameworks and are consistent with Regulation 28 of the Pension Fund Act. |
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JSE All Share vs S&P 500 Index (S&P)
| ๐ฅ๐๐ฒ๐ฎ๐๐๐ฟ๐ฒ๐ | ๐ป ๐๐ฆ๐ ๐๐น๐น ๐ฆ๐ต๐ฎ๐ฟ๐ฒ | ๐ป ๐ฆ&๐ฃ ๐ฑ๐ฌ๐ฌ ๐๐ป๐ฑ๐ฒ๐ (๐ฆ&๐ฃ) |
|---|---|---|
| ๐Location | South Africa | United States |
| ๐Stock Exchange | Johannesburg Stock Exchange (JSE) | New York Stock Exchange (NYSE) and NASDAQ |
| ๐Number of Companies | Over 170 | Approximately 500 |
| ๐Market Capitalization | Varied | Over $40 trillion (as of 2021) |
| ๐Index Calculation | Free float market capitalization-weighted | Market capitalization-weighted |
| ๐Global Recognition | Main index for South African equities | One of the most widely followed U.S. equity indices |
| ๐Currency | South African Rand (ZAR) | United States Dollar (USD) |
Conclusion
In conclusion,ย the JSE All Share Index plays a vital role in providing investors and analysts with valuable insights into the South African stock market’s performance and trends. Its comprehensive coverage of various sectors makes it a valuable tool for assessing the overall health of the nation’s economy, making it an indispensable resource for those interested in understanding and navigating the complexities of the South African financial landscape.
Disclaimer
Forex is a complex instruments and trading forex involves a high risk of losing money rapidly due to leverage. You need to understand how forex trading works and decide whether you can afford to take the risk of losing money on trade orders that do not go your way.
Forex Trading Africa annually reviews brokers and financial instruments and provides information to help traders and investors make better decisions when trading on global markets. The information provided is purely to grow your knowledge and expertise in financial trading.
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Frequently Asked Questions
What is the JSE All Share Index?
The primary index of the local stock market is the FTSE/JSE All Share index. It is the largest index in terms of size and total value and consists of companies that generally represent the top 99% of the companies listed on the main board of the JSE by market capitalization.
Who manages the FTSE/JSE All Share Index?
JSE Limited (JSE) and the FTSE Group (FTSE), a world leader in management of indices
Can I trade on JSE without a broker?
No, you cannot traded the All Star Index direct with the JSE. To trade the JSE All Share Index and buy shares listed on the stock exchange, retail traders and investors are required to go through a JSE-approved broker. ย Thereโs no method to purchase indices or shares direct from the JSE without using a broker unless the company offers a direct stock purchase plan, which is rare in South Africa. Fortunately, online brokerage fees are inexpensive; ranging from only 0.25% to 0.5% per trade.
What is an index value?
In simple terms, as prices and market values of the stocks within an index rise and fall, the index reflects this movement using a series of index values. Index values are calculated and published daily after the market closes. In some cases, index values are calculated in real time.
Are there other FTSE/JSE indexes?
Yes, there are three other indexes which have been launched under the FTSE/JSE Africa Indexes partnership. The four FTSE/JSE Africa Indexes are: FTSE/JSE Africa Indexes, FTSE/JSE Multi-Asset Composite Index Series, FTSE/JSE Multi-Asset Composite Index Series, FTSE/JSE Fixed Income Index Series
Why trade the JSE All Share Index?
A market where traders can trade securely with brokers using a set procedure.