How To Make The Best Of The South African Index FTSE/JSE Top40


How To Make The Best Of The South African Index

The FTSE/JSE 100 is a seismic South African index that groups the top 40 company stocks in the region, meaning that it offers a premium investment option and one that provides a critical insight into the performance of the region’s economy as a whole.

This index has also been in the spotlight recently, having enjoyed exponential growth in Q1 2021 and broken out above the 68,000 mark in the first week of March.

However, a recent decline of 0.6% to 68,238 on Wednesday not only snapped a three-day winning streak, but it also reminded investors of the indice’s crash through 2020. But what do you need to know about its recent performance, and how can you invest in the FTSE/JSE 100?

Its Performance In 2020 And The Best FTSE/JSE 100 Companies

As the coronavirus emerged as a global pandemic in March of last year, the price of the FTSE/JSE 100 crashed to 37,894.73. It remained mired below the 40,000 mark until March 24th, before climbing incrementally to 57,982.45 as the first wave of infections began to ease by August 4th.

A further decline followed in early November as the world began to experience a so-called “second spike”, but since then the FTSE/JSE 100 has appreciated significantly to breakout above 68,000 in March.

Despite its recent contraction, this is indicative of a true growth market, and one that’s being driven by a number of targeted stocks that have experienced huge growth as Q4 of 2020 has drawn to a close.

One of the most appealing FTSE/JSE 100 stocks is Naspers Ltd, which continues to trade within a broad range that has been in place since May of last year. The price has currently broken out above the middle of this range, which is indicative of an upward trend that’s likely to become increasingly bullish in the near and medium-term.

Another key FTSE/JSE 100 equities is BHP Billiton, with the long-term trend for this asset remaining upwards.

The price continues to trade above the 200 day simple moving average, while the short-term price action is in more of a range-bound environment with support considered at 34,610 and resistance at the 38,220 level.

How To Invest In The FTSE/JSE 100

Both of these assets can be traded as part of a broad and diverse strategy, and one that enables you to strike the balance between short and long-term options.

Interestingly, you may also want to invest in these stocks (and the index as a whole) through so-called “contracts for difference” (CFDs), which enable you to trade assets of this type without assuming ownership of the underlying financial instrument.

This certainly affords you greater flexibility, especially when you consider the fluctuations that we’ve seen in the value of the FTSE/JSE 100 over the course of the last 12 months.

You may also want to trade the index as a whole through a CFD or ETF (electronic traded fund), which allows you to pre-empt the movement of the FTSE/JSE 100 within a predetermined time range.

This also provides you flexibility as an investor, while enabling you to automatically diversify your interests and minimise exposure over time.