EMMA THOMASSON, Johannesburg | Monday 4.30pm
INVESTORS piled into the Johannesburg Stock Exchange 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 predicted a rosy 2000.
The Johannesburg All-Share index ended up 3,58% at 8963 points after briefly breaching the psychological 9_,000 level, inspired by rallying world markets and a robust outlook for the domestic economy.
Financial shares powered ahead on foreign buying, hoisting the banks and insurance-laced financial index to a 17-month high.
Gains on the financial board were led by Nedcor, which last year launched a hostile takeover bid against bigger rival Standard Bank Investment Corporation (Stanbic) .
”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.”
Local 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 more than 3% this year after virtual stagnation in 1999.
Mark Mobius, who manages about $12-billion of emerging market funds for Templeton Asset Management, last week picked South Africa as the top emerging market investment destination for 2000.
Banking stocks drove the equity rally, the sector’s index gaining nine percent as fears subsided of the Y2K bug which had held shares back before the new year.
The yield on the benchmark R150 bond, due in 2005, ended the day at 12,95%t, a level 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 R6,05 to the dollar, heading back towards levels last seen in October last year, but later slipped to around R6,07 to the dollar as a local dollar order weighed on the still weak post-holiday market. — Reuters