South Africa Stocks at Record in Best Start to Year Since 1999

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South Africa’s main stock index rose for a fifth day and headed for a third consecutive record close, with banks rallying as optimism over a global economic rebound fueled appetite for riskier assets. Local market giant Naspers Ltd. added impetus to the advance, rebounding from Thursday’s losses as global technology shares rose.

The FTSE/JSE Africa All Share Index advanced 1% as of 4:07 p.m. in Johannesburg, extending its gains this week to more than 7%, the best performance over the first five trading sessions of the year since 1999. The gauge has also outpaced the advance in MSCI Inc.’s index of emerging-market stocks, which is up 4.2% this week and reached a record high on Friday.

South African shares have climbed 68% from the pandemic-selloff low plumbed last March, and the recent rapid ascent has pushed the 14-day relative strength index on the gauge to almost 80, the highest since 2017. That’s well beyond the level of 70 viewed by some technical analysts as a signal that the gains may be overdone.

South Africa Stocks at Record in Best Start to Year Since 1999

Investors are piling into assets that win in an improving economic cycle, with ultra-loose monetary polices and hopes of more stimulus spending under U.S. President-elect Joe Biden adding fuel to these bets in a so-called reflation trade.

South Africa’s rand was the best-performing emerging-market currency against the dollar Friday, helping to drive gains in bank stocks. An index of local lenders surged 3.5%, adding to Thursday’s 3.1% increase. FirstRand Ltd. rose 4.5% and Standard Bank Group Ltd. added 3.9%, with the two stocks among the biggest drivers of the overall market strength.

Sasol Ltd. was prominent among gainers, climbing 4.1% with Brent oil topping $55 a barrel for the first time since February as Saudi Arabia’s unilateral output cut eased over-supply fears and amid the optimism on U.S. stimulus spending. Sasol’s 25% New Year surge makes it the best-performing Johannesburg stock early in 2021.

Tech investor Naspers contributed the most index points to the benchmark Friday, rising 1.3% to reverse some of Thursday’s 2.8% slump, as partly owned Chinese online giant Tencent Holdings Ltd. climbed 0.8% in Hong Kong.

Imperial Logistics Ltd. jumped as much as 10%, the most in seven months, benefiting from investors’ more upbeat outlook on the economy. Aspen Pharmacare Holdings Ltd. rallied for a fourth day, jumping as much as 5.4% to a four-month high. The company has agreed to manufacture doses of Johnson & Johnson’s coronavirus vaccine candidate in South Africa if it gains regulatory approval.

Gold stocks underperformed as demand for bullion as a haven waned. An index of miners of the precious metal retreated for a third day, falling 1.2%. AngloAshanti Ltd. slid 1% and Gold Fields Ltd. dropped 1.1%.

©2021 Bloomberg L.P.

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