(Bloomberg) -- Earnings estimates for South African stocks are at their highest ever, as analysts expect a major recovery in mining companies’ profits following a global rally in commodity prices in the past year.
“For the first time in 5 years, there’s a good commodity cycle and the mining earnings were so depressed a year ago that they are coming off such a low base that they are shooting the lights out,” Wayne McCurrie, head of portfolio management at Ashburton Investments, said by phone from Johannesburg. “The answer fundamentally is mining companies - there’s a massive turnaround in commodity share earnings. It’s got little to do with South Africa; iron ore has gone from $20 to $60, and that’s why they’re making money.”
Earnings estimates for companies listed on the Johannesburg Stock Exchange climbed to a record on May 9. The All Share index has gained 6.7 percent year-to-date.