Mining shares send SA stocks higher

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Photo: Filomena Scalise

Johannesburg - South African stocks ended higher on Thursday as gold mining shares surged thanks to a weaker rand and growing views that the sector is in an oversold territory.

Mining stocks have underperformed in recent months as investors fret over the sector's volatile relationship with labour after a wave of costly wildcat strikes since last year.

Gold Fields topped the gainer's list on the benchmark index, rising 7.6 percent to R74.72, booking its biggest daily percentage rise in about three years.

AngloGold Ashanti surged 6.35 percent to R224.07, also logging its biggest daily percentage gain in about three years.

“Gold mining shares really got massively hammered recently so we are seeing a lot technical buying support,” said Bernhard Grobler, head of stockbroking at Investec.

The rally in gold mining companies helped the benchmark Top-40 index gain 0.7 percent to 36,192.37. The broader All-share index improved by the same margin to 40,719.68.

The market is unfairly pessimistic about the gold sector's growth prospects, according to Thomson Reuters StarMine.

According to StarMine, which uses a blend of its own models and analyst estimates, Gold Fields should be trading at about R120, or 60 percent above its current level.

AngloGold Ashanti should be trading at around R571, according to StarMine, more than double its current level.

Standard Bank was 0.8 percent lower at R115.51 after reporting a modest 8 percent rise in profit and saying its veteran chief executive would retire.

Retailer Mr Price fell 1.5 percent on news it would be dropped from the benchmark Top-40 index. It will be replaced by insurer Discovery, which added two percent.

Trade was active, with 185 million shares changing hands according to preliminary data. A total of 129 shares advanced, 129 declined and 69 were unchanged. - Reuters