MARIAM ISA, Johannesburg | Friday 6.00pm.
SOUTH Africa’s volatile stock market will take its cue from Wall Street next week, although the global return to ”old-style” commodity shares should continue to support key indices, analysts said on Friday.
Africa’s biggest bourse put in a disappointing performance at the end of a week coloured by a record advance in the Dow Jones Industrial index, but the trend was blamed in part on a record expiry of March futures contracts on Thursday.
”I think the outlook for our market remains positive as long as the US holds up — if it goes down fund managers always return to home markets,” Absa Securities head of research Duncan Ingram said.
”Fundamentally we are comfortable and should go better but recent global volatilty is making investors nervous,” he said.
South Africa’s All-Share index had risen 0.84% to 8,005.7 on Friday, up from 7,925.9 a week ago, but this was viewed as poor showing given the Dow’s record leap of nearly 5% on Thursday.
An overhang of stocks from the futures expiry was seen as the main reason for the lacklustre showing, which was helped by stronger gains in commodity shares and a return to favour for the country’s recently-battered financial counters.
”We are following the worldwide trend and acting like lemmings — we continue to go back into resources and cyclicals just like the global market,” BOE Securities equities trader Greg Potter said.
Investors who did not participate in the first run on resource shares — which took the related South African index to a peak of 6,147.4 in January — were likely to jump in now but the sector was not expected to match its earlier rally.
More scope for gains was seen in the country’s financial sector, as the market decides that recent earnings disappointment was overdone. Johannesburg’s financial index took the lead on Friday, rising by 2.34%.
Further scope for gains is seen in BOE Ltd, which will make a long-awaited announcement on plans to restructure its non-core assets by March 22. The news helped push its share up by more than 13% on Friday.
The High Court’s hearing on Thursday of an appeal by Standard Bank Investment Corp against a hostile all-paper bid from its smaller rival Nedcor will be another key domestic event.
Attention will also be fixed on inflation data for February due on Monday and producer price data on Wednesday, which will be scrutinised closely for clues to whether the next move in domestic interest rates will be up.
Gold could be another dampener for shares, with bullion prices testing support at $285 per ounce ahead of Britain’s auction on Tuesday of another 25 tonnes of reserve gold.
But all of this is likely to be overshadowed by next week’s monetary policy meeting of the US Federal Reserve’s Open Market Committee, which is expected to result in a 25 basis point hike in US interest rates. — Reuters