Understanding the JSE Top 40


The JSE top 40 is an index of the 40 biggest listed companies on the JSE in terms of market capitalization. Wait up…market what?

Market capitalization is the number of shares issued multiplied by the current share price of the company.

Interestingly, although there are roughly 400 shares listed on this exchange, the top 40 index gives a pretty fair representation of market performance since the top 40 holds roughly 80% of the market cap on the JSE.

Whether a company makes it on or gets bumped off of the top 40 therefore obviously depends on the fluctuation of its share price. A prime example of this recently is Sappi relinquishing its top 40 position due to the recent listing of Prosus, a subsidiary of the top 40 heavyweight Naspers.

The JSE Top 40 rebalances every third week of the last month of every quarter (March, June, September and December). Similar indexes on other exchanges include the S&P 500, Nasdaq 100 and FTSE 100.

An investor looking for a more concise picture of the performance of the whole market should be looking at the All-share Index. Smaller and mid-sized companies list on the Alt X.