While industrial-listed companies as a proportion of the JSE’s Top 40 Index increased from 31% in the early 2000s to 70% in 2015, the resource-listed companies dropped, from over 50% to just 12% in the same period, though they slowly ticked back up to just over 20% by October.

This, noted Bayhill Capital MD Geoff Blount, was indicative of the changing fortunes of the sectors in the South African economy. He added, however, that there were other factors at play too.

For example, the uptick in resource-listed companies was attributed to the recovering resource prices, as well as the removal of SABMiller from the index. AB InBev, which acquired SABMiller, is listed on the exchange, but is not in the index.

Further, between the early 2000s and 2015, financials’ share of the market has been mostly flat at about 15% of the index after coming off the high of the financial services bubble that burst in the last of the 1990s. “And, of course, property stocks have slowly risen as the property sector has mushroomed, with some large property stocks making it into the Top 40,” Blount said.

These trends, he noted, indicated that South Africa missed the global commodity supercycle boom, largely as a result of policy uncertainty and a lack of reliable infrastructure, a point that was made by Mineral Resources Minister Mosebenzi Zwane at this year’s Mining Indaba.

“Investors have shied away from South African commodity companies, opting instead for global competitors. During the global commodities boom, which lasted from 2004 to 2011, in South Africa, resources’ contribution to the Top 40 Index actually slipped.

“With investors and company management spooked by corruption and government policy post the 2009 [President Jacob] Zuma administration election, they have looked to externalise their business and investment as much as possible. While the listed industrial sector on the JSE grew ostensibly, the economy deindustrialised,” he added.

In 2006, manufacturing accounted for 16.3% of gross domestic product, though today it accounts for just 12.5%.

“The trend to externalise our listed corporate earnings will continue until policy pragmatism and certainty returns. A good example is the Mineral and Petroleum Resources Development Act Amendment Bill, which empowers the  Mineral Resources Minister to designate strategic minerals and then set their selling price to support local manufacturing.

“Even government understands that BMW would not build any manufacturing plants here if the Trade and Industry Minister reserved the right, at his discretion, to set the price of BMW cars. Yet this is exactly what policy is doing in one of the most critical sectors of the economy,” Blount said.