South African equities extended their recent rally on Thursday, with the JSE All Share Index trading above the 100,500-mark in early trading.
Gains were led by communications, health services, and non-energy minerals, reflecting a potential rotation into defensive sectors.
However, market breadth remained mixed, with 11 of 20 sectors in decline, most notably distribution services, electronic technology, and retail trade.
Much of the near-term uncertainty stems from the United States’ decision to impose a 30% import tariff on certain South African goods starting from August 7th.
The tariffs are expected to impact strategic sectors such as automotive, steel, and agriculture, industries that contributed to the roughly ZAR 156.6 billion in exports to the US in 2024, accounting for 8% of South Africa’s total goods exports. Manufactured products, including vehicles and components, made up 43% of that export basket. For equity markets, the risk lies in potential earnings pressure across listed industrials and agri-processing firms, particularly those with material U.S. exposure.
In response, the South African government has accelerated trade diversification efforts, while preparing domestic support programs to stabilise output and employment. Progress in deepening ties with Asia, the Middle East, and the African Continental Free Trade Area provides longer-term upside, but near-term execution risks persist. While current momentum in the JSE index reflects strength, the medium-term outlook hinges on how quickly South Africa can realign trade flows and cushion the shock to key export-linked sectors.
