SA stocks extend record

The main South African stock index extended its advance to a fourth day, adding to Wednesday’s record close and tracking moves in most Asian markets amid expectations that US President-elect Joe Biden has a clearer path to boosting fiscal stimulus after key elections.

The FTSE/JSE Africa All Shares Index rose 1.92% to close at a record 63042.88.

An index of mining stocks advanced for a fourth day to an all-time high, with diversified giant Anglo American, up 4.61%, contributing the most points to the broader benchmark. Platinum producers extended their rally.

The Democrats’ victory in two key Georgia runoffs gives them control of the U.S. Senate and has reignited the so-called reflation trade that bets on a global recovery from the pandemic. That helped encourage risk-on sentiment in Johannesburg, offsetting local news including South Africa’s record number of new Covid-19 cases and a fresh round of electricity cuts.

Banks were also prominent among gainers, with FirstRand up 3.28% and Standard Bank Group rising 2.52%. An index for the sector advanced for a second day, climbing 3.08%.

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Weakness in tech investor Naspers and its unit Prosus NV curbed gains in the broader benchmark after reports that the Trump administration may bar investments in China’s two most valuable companies, Alibaba Group and Tencent. Naspers, which holds a 31% stake in Tencent through Prosus, fell 2.81% as its subsidiary retreated 3.29%.

Read: Alibaba, Tencent shares drop

“The JSE is following the U.S. playbook, looking through the virus second wave to stimulus hopes with Democrat control of the Senate,” said Tom Gale from Standard Bank’s equities trading desk. “A steeper US yield curve is helping boost banks and commodities and that’s feeding through here. Tech is out of favour on rising anti-trust risk and U.S.-China tension, and that helps fuel rotation from last year’s winners to losers.”

South African stocks’ charge to all-time highs has triggered a signal that the rally may be overdone. The 14-day relative strength indicator on the benchmark index has climbed beyond 70, a level regarded by some analysts as warning that the market may have risen too rapidly and be poised for a retreat.

© 2021 Bloomberg L.P.