Stocks surge most in 8 months as rand strengthens

‘Dual-listed stocks got hit the hardest, so your SABs, Mondis, are still probably the right play.’
South African stocks rose for the first time in five days, rebounding from an 8-month low amid an emerging market selloff on Monday, as the rand rallied the most in more than a month.

The FTSE/JSE Africa All Share Index jumped 3.1%, the most since December 18, to 49,088.84 as of 1:24 pm in Johannesburg on Tuesday, with 131 stocks gaining, 27 falling and 9 unchanged. The currency of Africa’s most industrialised economy strengthened 1.2%, the most in more than three months, to 13.0696 per dollar after falling to a record low of 14.0682 in thin Asian trading on Monday that exaggerated moves.

“What we’re seeing is a relief rally,” Grant Cullens, chief executive of African Alliance Securities, said by phone from Johannesburg. “The question is whether or not there’s going to be longevity in it. By and large we’ve probably seen the worst of the correction.”

The rand’s 12% depreciation against the greenback this year is bolstering the case for interest-rate increases later this year that will take borrowing costs to their highest level in five years, heaping pressure on an economy struggling to recover from the slowest rate of expansion since a 2009 recession. Panic selling engulfed developing markets on Monday as Chinese shares plunged the most since 2007, commodity prices slumped to a 16-year low, and a gauge of currencies sank to a record.

Leading gains

Leading gains on the All-Share Index were Imperial Holdings owner of South Africa’s biggest car-dealership network, which climbed as much as 13% after saying it is looking for acquisitions to expand its logistics business on the continent as growth in its home market slows. Naspers Africa’s most valuable company with a market capitalisation of R716 billion ($56 billion) made the biggest contribution to the index’s gain, adding 5.4% to R1,693.60.

SABMiller, the world’s second-biggest brewer, gained 2.3% to R614.99, while Mondi Plc, a paper and pulp producer, added 3% to R293.89.

“The dual-listed stocks are the probably the best bet at the moment,” Rob Pietropaolo, a trader at Vunani Private Clients, said by phone from Johannesburg, referring to companies including Mondi and SABMiller that are listed in London and Johannesburg. “The dual-listed stocks got hit the hardest, so your SABs, Mondis, are still probably the right play.”

©2015 Bloomberg News

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