By Carolyn Cohn
LONDON Feb 29 (Reuters) – Growing global bullishness
may erode South African stocks’ perceived safe haven status,
which helped them outperform many emerging markets last year
despite infrastructure bottlenecks, political risk and rand
volatility.
The shift is already evident in returns with shares in South
Africa’s BRIC peers all romping higher, faster than the 7
percent gained by the former this year.
South Africa’s stocks kept their value in 2011 in local
currency terms, while fellow members of the political BRICS
grouping — Brazil, Russia, India and China in addition to South
Africa — all fell around 20 percent. Developed market stocks
lost nearly 8 percent in dollar terms.
Still, south Africa’s broader all-share index hit
record highs last month and is trading within one percent of
those levels, while the more closely-watched Top 40 index index
reached three-year highs.
But, analysts say, many of these gains are due to last
year’s relatively strong performance.
Investors have attributed South Africa’s defensive appeal to
its insulation from major markets and its healthy financial
system, which have sheltered it from the euro zone debt crisis.
The country’s core gold mining sector has also gained from
heavy safe-haven buying of gold since the 2008 crisis erupted.
But now investors worldwide have clearly switched into
risk-on mode, hailing stronger U.S. economic data, quantitative
easing by the Federal Reserve and the European Central Bank and
a second bail-out for indebted euro zone member Greece.
Continued…
