INTER-MARKET ANALYSIS: JSE Telecoms Index vs JSE All Share Index

Long Term Shift -Sitting Between Equal to Overweight vs All Share Index

On a relative basis, and from a sector allocation perspective, the relative ratio chart of the JSE Telecommunications Sector versus the JSE All Share Index suggests that long term investors are possibly shifting from an underweight to equal weight and overweight positions versus the benchmark. Technical evidence of this is provided by the break of the channel extending back to October 2014. We also note the break of the downward trend line extending back to the peak of November 2007 (a positive development).

WHY USE INTER-MARKET ANALYSIS? Inter-market is a powerful form of analysis, which is often utilized at an institutional level. The purpose being to ascertain which sectors, individual stocks, bonds or currencies may outperform or under-perform another. Essentially, it assists investors in understanding where to allocate capital and where to be over, under or equal weight, versus the market or versus an another sector.