South Africa Stocks at Record in Best Start to Year Since 1999

(Bloomberg) --

South Africa’s main stock index rose for a fifth day and headed for a third consecutive record close, with banks rallying as optimism over a global economic rebound fueled appetite for riskier assets. Local market giant Naspers Ltd. added impetus to the advance, rebounding from Thursday’s losses as global technology shares rose.

The FTSE/JSE Africa All Share Index advanced 1% as of 4:07 p.m. in Johannesburg, extending its gains this week to more than 7%, the best performance over the first five trading sessions of the year since 1999. The gauge has also outpaced the advance in MSCI Inc.’s index of emerging-market stocks, which is up 4.2% this week and reached a record high on Friday.

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South African shares have climbed 68% 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 U.S. President-elect Joe Biden adding fuel to these bets in a so-called reflation trade.

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South Africa’s rand was the best-performing emerging-market currency against the dollar Friday, helping to drive gains in bank stocks. An index of local lenders surged 3.5%, adding to Thursday’s 3.1% increase. FirstRand Ltd. rose 4.5% and Standard Bank Group Ltd. added 3.9%, with the two stocks among the biggest drivers of the overall market strength.

Sasol Ltd. was prominent among gainers, climbing 4.1% with Brent oil topping $55 a barrel for the first time since February as Saudi Arabia’s unilateral output cut eased over-supply fears and amid the optimism on U.S. stimulus spending. Sasol’s 25% New Year surge makes it the best-performing Johannesburg stock early in 2021.

Tech investor Naspers contributed the most index points to the benchmark Friday, rising 1.3% to reverse some of Thursday’s 2.8% slump, as partly owned Chinese online giant Tencent Holdings Ltd. climbed 0.8% in Hong Kong.

Imperial Logistics Ltd. jumped as much as 10%, the most in seven months, benefiting from investors’ more upbeat outlook on the economy. Aspen Pharmacare Holdings Ltd. 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.

Gold stocks underperformed as demand for bullion as a haven waned. An index of miners of the precious metal retreated for a third day, falling 1.2%. AngloAshanti Ltd. slid 1% and Gold Fields Ltd. dropped 1.1%.

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