Johannesburg - South Africa's resource-heavy Top 40 index will climb over 3 percent to new all-time highs before the year-end, as resource stocks and the global economy regain momentum, a Reuters poll found.
A recovery in gold prices, which have already rallied about 10 percent since hitting year-lows in late June, should further bolster the benchmark Top-40 stock index that has risen almost 40 percent since the year started.
That stellar performance in comparison with global peers is down to big companies with revenues in foreign currencies, which have fared particularly well as South Africa's rand has weakened over 15 percent.
The poll of 10 analysts carried out over the past week predicted the index will rise to another life-time high of 40,000 by the end of 2013, from Tuesday's close of 38,578.53, and even higher to 44,000 at the end of next year.
“A lot of the index is made up of mining stocks, particularly gold miners, so an increase in gold prices can often lead to a boost in the Top 40 index,” said Shilan Shah at Capital Economics.
“Even though you get poor data on the economy, that does not necessarily get reflected in equity prices ... (and) we forecast a further recovery in gold prices over the next couple of years which will help,” added Shah.
In a poll carried out six months ago, the index was expected to end the year at a lifetime high of 39,150 points, which the blue chip index comfortably surpassed in September.
Respondents said they did not see a long-term risk from the political wrangling that is currently taking place in Washington over the lifting of the debt ceiling.
Rigardt Maartens, a portfolio manager at PSG Konsult added that a decisive move in the equity markets would be triggered by a sustainable recovery that would start next year in the U.S. and Europe. - Reuters