South Africa’s Main Stock Index Hits 60,000 for First Time

JOHANNESBURG (Capital Markets in Africa) – South Africa’s benchmark stock index reached the 60,000 points level for the first time as investors responded positively to news that Cyril Ramaphosa has the lead in the African National Congress leadership race and a weakening rand gave support to exporters.

The FTSE/JSE Africa All Share Index climbed as much as 0.8 percent to 60,140.33 in Johannesburg, before settling at a record close of 59,975.67, a gain of 0.6 percent.

Signs that Deputy President Ramaphosa is ahead in the race to succeed President Jacob Zuma as ruling-party head are supporting the market, according to Stephen Meintjes, a senior analyst at Momentum SP Reid. Such an outcome would help lift concerns about policy and political uncertainty that have been weighing on business and consumer confidence.

The Mail and Guardian reported on Nov. 3 that Ramaphosa has taken an early lead in nominations for the next leader of the African National Congress, with results of general meetings received from almost a third of the party’s branches. The Star newspaper said on Monday that Ramaphosa wants South African Science and Technology Minister Naledi Pandor as his deputy should he be chosen as leader next month.

“It may be that some market players are taking Ramaphosa’s announcement of his slate as an early indication of likely success in the leadership contest,” Meintjes said by phone. “I think this is why people are buying the market.”

Exporters Gain
The South African stocks benchmark has advanced 18 percent this year, compared with a 31 percent gain in the MSCI Emerging Market Index.

Exporters, companies with significant foreign operations and those with listings on developed-market exchanges were among the biggest gainers. Naspers Ltd. contributed the most index points to the benchmark gauge Monday, climbing 2.1 percent to a record 3,541.54 rand. BHP Billiton Plc, Anglo American Plc and AngloGold Ashanti also advanced.

An index of banking stocks rose to a two-week high, with Standard Bank Group Ltd. leading the gains, rising 1.3 percent.

The South African currency has weakened 4.6 percent against the dollar since the start of the fourth quarter, the most among developing-nation currencies after the Turkish lira. Political uncertainty along with investor concerns about South Africa’s widening budget deficit and further potential credit-rating downgrades have weighed on the rand.

Source: Bloomberg Business News