OWN CORRESPONDENT, Johannesburg | Monday 4.30pm
INVESTORS piled into South African markets on Monday, pushing equities to fresh record highs and bond yields down to levels not seen since the emerging markets crisis of 1998, as economists predict a rosy 2000.
In a massive rally that swept across the market, the financial index rocketed over 7%.
The Johannesburg Stock Exchange’s all-share index leapt over three percent to touch a high of 8962.8 points on the back of strong local and foreign demand and inspired by rallying world markets and a robust outlook for the domestic economy.
The strong local markets mirrored international gains — as world markets rose in line with an upswing in US stock.
”All the fundamentals are in place,” said Greg Potter, a share dealer at BOE Securities. ”We are looking for a reduction in the prime [interest] rate of one to 1,5 percentage points and there are positive noises from emerging market fund managers.”
South African stocks and bonds are benefiting from rising commodity prices, a steady currency and falling interest rates, which are expected to combine to produce economic growth of over three percent this year after virtual stagnation in 1999.
Mark Mobius, who manages about $12bn of emerging market funds for Templeton Asset Management and is usually recognised as a guru in Asia, last week picked South Africa as the top emerging market investment destination for 2000.
The yield on the benchmark R150 bond, due in 2005, hovered around 13%, earlier touching 12.93 as the market tested levels not seen since the emerging markets crisis of May 1998 when South African debt and equities took a pounding.
The rand started off the day at around 6.05 to the dollar, its best level since October last year, but later slipped to around 6.07 to the dollar as some players took profit.
Darren Grabham, Rand Merchant Bank technical analyst, said 13% on the R150 bond was a psychological level and said the market should test resistance at 12.89 and 12.81% in the next week or so, with 12.64% a short-term goal. — Reuters