Johannesburg – The All-share index on the JSE crept back to above the 50 000 level on Friday morning, but could not maintain it and was at midday just below the magical mark.
The index breached the level for the first time on Thursday morning, but could not close above that level.
It was however still higher than Thursday’s close. By midday, the All-share index was 0.15% higher on  49 966 points, after being almost 0.7% higher at one stage,  while the Top 40-index gained 0.20% to 44 929 points. All the major indices were marginally higher, except the gold index.
It was again the big capitalisation shares that pushed the index higher, and some of them traded at new records on Friday morning. These shares all have a big influence on the indices because of their weight in the indices. Amongst them are MTN, Standard Bank, Remgro, Sanlam and Sasol.
Many analysts have warned that current record levels in the the All-share index cannot be maintained, as the valuations are too high to be sustainable.
The average price/earnings ratio of the JSE is currently 19, which is much higher than the life long average of 12. The average was only twice in history higher than the current levels – in 1969 and in 1994.
In theory it means that an investor will have to wait 19 years to get the money that he paid for shares back in the form of earnings, which sounds like a long time.
The consensus is that South African share prices are driven higher by cheap money from overseas which is looking for higher yields that are not available in the developed world. More and more local investment managers are concerned about the values of local shares.
From the local shares with high price earnings ratios are Richemont [JSE:RCH] (214), Naspers [JSE:NPN] (66) and SABMiller [JSE:SAB] (27). Of these share Richemont increased with 0.66% to R108.77 and is now close to the previous record set in February.
Naspers, which lost some ground late on Thursday, was 0.44% higher on R1 213.87. SABMiller retreated from Thursday’s high and traded 1.26% lower on R579.50.
However, the price earnings ratios of some of the other heavyweights in the index which are trading at 52-week highs are still below the market average. One of them is Sasol [JSE:SOL] which is trading at a P/E of 10.12 and gained 1.01% on Friday morning to a record of R600.97.
Standard Bank [JSE:SBK], trading at a P/E of 13 was 1.11% higher on a high of R145.47, while Sanlam[JSE:SLM] increased with 0.32% to R59.54 and is now trading at a P/E of 14.
Remgro [JSE:REM] was 1.13% higher on a record of R221.48 and its hospital subsidiary MediClinic [JSE:MDC]set yet another record 1.74% higher on R82.61. Remgro’s P/E is 18 and that of MediClinic 19.
MTN [JSE:MTN], with a PE of 16,  fell back on Thursday from Wednesday’s record but was again 0.39% higher this morning on R223.11.