Johannesburg - South African stocks edged up 0.33 percent on Monday, booking another record finish as investors piled into longstanding favourites such as paper maker Mondi and luxury goods firm Richemont.
But further gains are likely to be limited, given the string of record highs this year that have pushed Johannesburg stocks into pricey territory.
With a price-to-earnings ratio of nearly 20 times, South African stocks are the most expensive of 30 emerging market indices tracked by Thomson Reuters.
“As counterintuitive as it is, the higher these stocks go, the safer people feel,” said Nic Norman-Smith, chief investment officer at Lentus Asset Management in Johannesburg.
“They think those returns can extrapolate themselves into the future, but history has shown that often ends in tears.”
The benchmark Top-40 index rose 0.33 percent to 40,863.34, its highest finish on record.
The index is up more than 17 percent this year in local currency terms, although overseas investors have not been as lucky. In dollar terms, the Top-40 is down 2 percent, hit by a sell-off in the rand currency.
The broad All-Share index edged up 0.24 percent to 45,671.44, also a record close.
The weakness in the rand has pushed investors toward exporters and local listings of foreign companies, both of which are immune to a downturn in the currency.
Shares of paper maker Mondi rose 1.8 percent to 182.50 rand. The company, which draws nearly 90 percent of its revenue from outside of South Africa, has seen its stock nearly double this year.
Richemont, the Swiss maker of Cartier watches and Mont Blanc pens that is run by South Africa's Rupert family, rose 1.2 percent to 104.76 rand.
Shares of explosives manufacturer AECI may rise on Tuesday.
The company said after the close of trade it would sell property to China's Shanghai Zendai Property Ltd for 1 billion rand ($98 million).
Trade was relatively active, with 169 million shares changing hands, according to preliminary data.
Advancers outnumbered decliners, 172 to 148, with shares of 69 companies unchanged. - Reuters