Banks Send South Africa Stocks to Record as Foreign Buying Persists

JOHANNESBURG (Capital Markets in Africa) – Johannesburg’s benchmark stock index rose to a record, joining a global rally, as foreign investors continued purchases amid optimism about steps to improve management of Africa’s most-industrialized economy.

The FTSE/JSE Africa All Share Index rose as much as 0.9 percent to 61,610.33 Tuesday. Naspers Ltd. contributed the most to the benchmark’s advance after Tencent Holdings Ltd., in which it owns a stake, climbed to an all-time high in Hong Kong. An index of banking stocks climbed as much as 3 percent to a record.

Purchases of South African stocks by foreigners have accelerated to the fastest pace since records began in 1997, figures from exchange operator JSE Ltd. show. Investors may be encouraged by the election of Cyril Ramaphosa as head of the ruling African National Congress and signs of steps to overhaul leadership at major state-owned companies such as power producer Eskom Holdings SOC Ltd., said Michele Santangelo, a money manager at Independent Securities.

“We’re seeing foreigners picking up the South Africa Inc.-type stocks,” Santangelo said by phone from Johannesburg. “We’re starting to see some good flows. There’s some positive sentiment across the board generally again, coupled with the continual good news that’s coming out of South African politics.”

FirstRand Ltd. led gains among banks Tuesday, advancing 3.4 percent. Insurers also gained, with MMI Holdings Ltd. and Sanlam Ltd. up 3.3 percent or more. An index of general retailers added 2.6 percent after positive trading updates, with Lewis Group Ltd. gaining 16 percent. Among food and drug retailers, Clicks Group Ltd. rose 4.6 percent.

Speculation that Zuma may leave office before his term ends in 2019 is spurring investment in South African assets, with JSE figures showing that foreign investors were net buyers of local stocks for the past five days.

The South African benchmark index was 0.8 percent higher as of 11:46 a.m. in Johannesburg. The MSCI EM Index of emerging-market stocks was 1 percent higher, advancing for an eighth day, its longest winning streak since July.

Johannesburg stocks are starting to benefit from the positive sentiment dominating emerging- and developed-market equities, Santangelo said. “There might be some more legs on the South African market.”