Metals Gave South African Stocks an October Lift
Metals Gave South African Stocks an October Lift
(Bloomberg) -- South African stocks have proved immune to weakness shown in the country’s other asset classes this month and they mostly have rising metal prices to thank.
The mining sector represents about 40% of the benchmark equities index and gains in the likes of platinum and copper have spurred a rerating among producers of the commodities in October. The mining subgroup has risen 20% this month, led by a 49% surge in Royal Bafokeng Platinum Ltd. after the company opened talks to be bought by Impala Platinum Holdings Ltd.
The sector’s strength has helped the FTSE/JSE Africa All Share Index advance 5.5% to date in a month that has been less kind to other asset classes. The rand has fallen 1.1% versus the dollar, while the nation’s local-currency debt is down 1.2% in dollar terms.
Sentiment toward both the currency and bonds has been soured by upcoming risks including a local municipal vote on Nov. 1, Finance Minister Enoch Godongwana’s maiden medium-term budget speech on Nov. 11 and a South African Reserve Bank rate decision due Nov. 18.
Peter Takaendesa, head of equities at Mergence Investment Managers, is optimistic on the outlook for stocks. With metal prices set to remain “quite strong,” the index is likely to perform well into 2022, he said.
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