To contribute to economic growth and development, a
stock market, as a leading economic indicator, should reflect the macroeconomic
fundamentals of a country by reacting to political, economic and other
significant events via return adjustments for companies listed on the stock
market. This article aims to provide a historical perspective on how political
and economic events reflected in returns on the Johannesburg Stock Exchange
(JSE) between 2010 and 2022. An event study methodology establishes whether the
top 20 best and worst weekly return periods on the JSE all-share index (ALSI)
coincided with local and international events. The performance of the JSE
during this period is dominated by events related to recovering economies and
stock markets after the Global Financial Crisis, substantial influence by the
U.S. and China, and the devastating effect of the COVID-19 pandemic during
2020. The study concludes that although the JSE clearly and immediately
reflected global macroeconomic and political changes, it responded little, or
for long, to local developments. However, these local developments and
structural deficiencies collectively caused share market performance in South
Africa to disconnect from the developed world since 2013, contributing to poor
local market performance, reduced investor confidence and increased capital
outflows.
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