Johannesburg - South African stocks rose for a third straight session on Wednesday as banking stocks like FirstRand extended recent gains on hopes of a interest rate hike, which could boost their bottom lines.
Twenty-three of 30 economists polled by Reuters expect the Reserve Bank to keep its repo rate at 5.5 percent on Thursday after lifting it by 50 basis points in January, but there is still a chance of another hike.
“If it lifts again now it will mean a lot for the margins the banks can ask in lending and this will feed to their bottom line,” said Christie Viljoen of NKC Independent Economists.
FirstRand added almost three percent to 36.65 rand, while rival Standard Bank, Africa's biggest bank by way of assets, gained 2.8 percent to 136.50 rand.
“If the central bank doesn't hike though you might see a pull back in the banks,” said Viljoen.
The Johannesburg Bank index, which climbed 2.75 percent, has now strayed into overbought territory, according to its 14-day RSI, a momentum indicator followed by some chartists.
This would also suggest a correction could be on the cards.
The Top-40 index added 0.52 percent to 42,943.04 while the wider All-share index put on 0.56 percent to end the day at 47,652.89.
Both indices are within close distance of recently scaled record highs.
IT firm Pinnacle Holdings extended the previous session's steep losses, shedding a further 24 percent to 11.45 rand, after police said on Tuesday an executive director of the company had been charged for allegedly attempting to bribe a senior officer to win a tender for the firm.
Advancers outnumbered decliners 183 to 120 with 58 issues unchanged, according to preliminary bourse data.
Around 187 million shares changed hands. - Reuters