South Africa Stocks Are on Track for a Record Month
Unprecedented demand for online services and entertainment during Covid-19 pandemic lockdowns, along with a scramble for haven investments, helped South African stocks post their best month in almost 17 years.
The benchmark index in Johannesburg gained 13% in April, the most since May 2003. Global equity markets are rising as investors assess plans by countries to restart activity and amid signs of progress in treating the coronavirus, but South African stocks have outpaced their emerging-market peers.
Naspers Ltd. was the biggest contributor to April’s gains, with the Cape Town-based tech investor advancing to record highs as it benefits from its 31% stake in Chinese internet giant Tencent Holdings Ltd. AngloGold Ashanti Ltd. and Gold Fields Ltd. were also among leading market drivers as bullion heads for its best month since 2016, thanks to its allure as a store of value.
“The preference for safe havens will remain for extended periods, even with the increase in optimism, as investors try to preserve capital while participating in the upside we’re seeing,” said Lulama Qongqo, an analyst at Mergence Investment Managers in Cape Town.
Naspers, up 14% in April, accounts for 20% of the main index, with market heavyweights BHP Group Ltd. and Richemont also among the top five contributors to this month’s advance.
“Naspers has been a star performer in April,” said Michele Santangelo, a money manager at Independent Securities in Johannesburg. “The tech sector globally has also fared much better than other sectors under the coronavirus. This, coupled with rand weakness, has supported the Naspers share price.”
In percentage terms, Sasol Ltd. has surged the most, its price more than doubling in April as the battered oil producer set out plans to shore up its finances. The South African benchmark index dropped 1% on Thursday.
©2020 Bloomberg L.P.