OWN CORRESPONDENT, Johannesburg | Friday 4.40pm.
STOCKS on the JSE look set for more gains next week, underpinned by prospects of a stronger economy in 2000, but some equity analysts warned on Friday that rate fears offshore might trigger volatility.
Analysts said the Johannesburg bourse, which vaulted by 57% last year, hitting new highs for several consecutive sessions towards the end of 1999, was still relatively cheap with a market price earnings ratio of 16.8.
“There’s tremendous belief in this market. I’m bullish,” said Greg Amoils, a portfolio manager and director at Appleton Securities.
Amoils said a firmer local rand currency and mounting speculation that rating agency Standard & Poor’s might grant South Africa a coveted investment grade rating was also boosting investor enthusiasm for the country’s equities.
Mark Mobius, who manages about $12-billion of emerging market funds for Templeton Asset Management, on Thursday picked South Africa as the top emerging market investment destination for 2000.
Mobius, who went overweight in South African equities last year, catching a 13% gain in the market in December alone, did not detail his reasons for picking South Africa, but said the emerging market bull run will remain intact, despite a possible rise in US interest rates.
“Fundamentally we still look good. Y2K has come and gone as we predicted without any disruption whatsoever,” Investec Guiness Flight Global Asset Management said in a statement.
Meanwhile the JSE continued Thursday’s run but dropped back from a new intra-session midday high of 8 667 to close 2,62% or 221 points strong at 8653.
Gold shares closed 3,97% or 43 points up, financials 3,06% or 318 points good and industrials 2,35% or 213 points strong.
“I think we will see higher levels yet…If corrections are not severe in New York it may well attempt the next round number. Medium-term momentum is still good,” said London-based Luise Kliem, a technical analyst with Merrill Lynch.
The rand gained slightly against major international currencies and at 4.30pm was trading at R6,05 to the dollar and R9,93 to the pound.
At the same time gold was trading on international markets at $282,20 to the ounce.
The Hang-Seng closed 1,67% or 252 points strong, while the Nikkei ended the day 0,14% or 25 points good.