South African stocks are set for more record highs after risk sentiment returned to the markets as investor appetite was buoyed by the rise in resources, financials, mining, retailers and banking stocks. Picture: Nhlanhla Phillips/African News Agency/ANA
South African stocks are set for more record highs after risk sentiment returned to the markets as investor appetite was buoyed by the rise in resources, financials, mining, retailers and banking stocks. Picture: Nhlanhla Phillips/African News Agency/ANA

Stocks rise on favourable geopolitical climate

By Siphelele Dludla Time of article published Jan 11, 2021

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JOHANNESBURG - SOUTH African stocks are set for more record highs after risk sentiment returned to the markets as investor appetite was buoyed by the rise in resources, financials, mining, retailers and banking stocks.

The JSE All Share Index on Friday rose 0.76 percent to an all-time high of 63 519 points, while the Top40 Index shot up 0.72 percent to 58 423 points.

The JSE’s largest investor, Naspers, firmed 1.88 percent higher to R3 070.27, while Sasol rose 4.6 percent to R168.34 per share.

Banking stocks also accelerated, with FirstRand increasing 3.83 percent to R52.31, Standard Bank 3.19 percent to R131.18, Nedbank rose 1.92 percent to R130.05, while Absa remained flat at R592.

Retailers followed suit with Shoprite up 3.85 percent to R138.34, Spar 2.74 percent higher at R197.53, and Pick n Pay 3.69 percent higher at R50.

Analysts said investors were becoming less anxious following the finalisation of Brexit and the certification of the US election results.

FXTM market analyst Han Tan said stock market bulls had many reasons to expect further gains, including an increased likelihood of more US fiscal stimulus.

“Investors are getting more comfortable wading further out into risk-on waters, considering that the spillover from last year’s downside risks have subsided, including Brexit concerns and the US election cycle,” Tan said.

“Such elements are fostering a highly supportive environment for global equities, affording investors the luxury of looking past the persistent pandemic woes.”

Markets.com chief market analyst Neil Wilson said investors continued to overlook any short-term worries about Covid-19 and focused on more on the the US stimulus, fiscal expansion, infrastructure spending and a return to near-normal later in the year.

“There are hopes of a more settled political environment in the US and the firm belief that fiscal expansion and continued monetary policy support will deliver further upside for equity markets,” Wilson said.

South Africa has secured 1.5 million doses of the Covid-19 vaccines for healthcare workers developed by the University of Oxford and AstraZeneca from the Serum Institute of India.

News that the rollout of the vaccine is expected to start sooner than anticipated following harsh criticism of delays has seen investors having appetite to move into riskier assets.

The rand traded strongly against the dollar, rising 1.83 percent to R15.31 – but far from last week’s best perfomance of R15.08 against the greenback after Congress officially endorsed Joe Biden as the next US President on Thursday – on the country’s rapid increased Covid-19 cases and fears of further lockdown restrictions

South Africa’s new daily cases of Covid-19 are now around 20 000, from 12 000 a day at the start of last week.

Investec’s chief economist, Annabel Bishop, said the confirmation of Oxford-AstraZeneca vaccine was very good news for the economy and its citizens, but vaccine aversion grows as the second wave dwarfs the first.

“Grave concerns still centre around corruption, which has proved opportunistically rife, while weak links in government co-ordination and delivery in the past give rise to concerns of breakdowns in the chain of delivery in South Africa of the vaccine to individuals,” Bishop said.

BUSINESS REPORT

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