LUCIA MUTIKANI, Johannesburg | Friday 3.20pm.
SHARES on the Johannesburg Stock Exchange will remain under the spell of US markets next week, despite increasing potential for an upward thrust, traders and asset managers said on Friday.
”The thing to watch out for is the US markets. The feeling in our market is that we are closer to the bottom, which means that the market ought to be upwards from here on,” said Andile Mazwai, a trader with stockbrokers Barnard Jacobs Mellet.
The Johannesburg bourse’s benchmark All Share index gained 1,85% in the week to Thursday, buoyed by convincing peformances on Wall Street and a good set of domestic economic data which eased fears of a looming interest rate hike.
Trade this week was also boosted by futures players buying underlying shares ahead of the June 15 futures contracts close out.
The All Share index is still down 13,2% this year. Traders said although South African equities are perceived as being cheap, an appreciation in share prices is not guaranteed. ”We are not going to go up unless the States starts moving up,” said Mazwai.
Activity on the Johannesburg bourse next week is seen shifting from resources stocks to banking and insurance shares which have been hammered in recent weeks.
Financial stocks are also expected to benefit from the switch from resource shares, expected to come under pressure as the rand continues its gentle recovery from its R7,20/dollar record low hit on May 25.
The rand was last bid at R6,92/dollar, supported by news that the country’s combined gold and foreign exchange reserves rose in May despite large capital outflows.
”A lot of individual shares – coal, diamonds and platinum – are overbought. There is more risk on the downside than on the upside,” said Grahame Graham-Parker, chief operating officer at Prodigy Asset Management. — Reuters