SA stocks at fresh record as miners ride stimulus bets

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The Johannesburg Stock Exchange index rose for a fifth day and headed for a third consecutive record close, as mining stocks benefited from hopes for US economic stimulus. Naspers [JSE:NPN] added impetus to the rally, rebounding from Thursday’s losses as global technology shares rose.

The FTSE/JSE Africa All Share Index advanced 1% as of 9:50 in Johannesburg, extending its gains this week to more than 7%, the strongest performance since early November and outpacing the 3.9% rise in an MSCI Inc. gauge of emerging-market stocks.

South African shares have climbed 67% 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.

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

Diversified miner Anglo American [JSE:AGL] gained 0.7% and peer BHP Group rose 0.5% to continue the support they’ve provided to the South African market this week. An index of mining stocks advanced for a fifth day, adding a further 0.3% to Thursday’s record high.

Sasol [JSE:SOL] was prominent among gainers, climbing 2.7% with oil headed for a ninth weekly gain in 10 as Saudi Arabia’s unilateral output cut eased over-supply fears and amid the optimism on US stimulus spending. Sasol’s 24% New Year surge makes it the best-performing Johannesburg stock after Glencore [JSE:GLN] early in 2021.

The rand strengthened moderately in Friday’s risk-on environment, boosting local bank stocks. A gauge of local lenders gained 0.6%, with FirstRand [JSE:FSR] up 1.2% and Standard Bank [JSE:SBK] rising 0.7%.

Tech investor Naspers contributed the most index points to the benchmark in Friday morning trading, rising 1.7% to reverse some of Thursday’s 2.8% slump, as partly owned Chinese online giant Tencent climbed 1% in Hong Kong.

Aspen Pharmacare [JSE:APN] 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.

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