The Johannesburg Stock Exchange index extended its advance to a fourth day, adding to Wednesday’s record close and tracking moves in most Asian markets amid expectations that US President-elect Joe Biden has a clearer path to boosting fiscal stimulus after key elections.
The FTSE/JSE Africa All Shares Index rose 0.4% as of 9:46 in Johannesburg. An index of mining stocks advanced for a fourth day to an all-time high, with diversified giants BHP Group, which gained 1.5%, and Anglo American [JSE:AGL], up 1.4%, contributing the most points to the broader benchmark. Platinum producers extended their rally, led by Anglo American Platinum’s [JSE:AMS] 4.2% surge.
The Democrats’ victory in two key Georgia runoffs gives them control of the US Senate and has reignited the so-called reflation trade that bets on a global recovery from the pandemic. The rand gained for the first day in five as investors took heart from the Democrat Senate win, offsetting local news including South Africa’s record number of new Covid-19 cases and a fresh round of electricity cuts.
South African stocks’ charge to all-time highs has triggered a signal that the rally may be overdone. The 14-day relative strength indicator on the benchmark index has climbed beyond 70, a level regarded by some analysts as warning that the market may have risen too rapidly and be poised for a retreat.
Technical indicator suggests South African stock gains may be overdone. Weakness in tech investor Naspers [JSE:NPN] and its unit Prosus curbed gains in the broader benchmark after reports that the Trump administration may bar investments in China’s two most valuable companies, Alibaba Group and Tencent. Naspers, which holds a 31% stake in Tencent through Prosus, fell 2.2% as its subsidiary retreated 2.6%. Tencent slid 3.5% in Hong Kong.