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South Africa’s leading stock indicator extended gains on Monday, to rise as much as 2.8% to the highest since Aug. 6, after progress in developing a coronavirus vaccine triggered a rebound in financial markets.
“The announcement of a highly effective vaccine removes some of the long-standing concerns that the economic disruption caused by the Covid-19 pandemic would persist indefinitely,” says Lester Davids, investment strategist at Sharenet Securities. “On this basis, we are seeing massive purchases in most of the risk assets, both in developed and emerging markets.”
The gains come as markets celebrate “certainty around the US presidential election” after Joe Biden’s victory, Davids says. Some investors speculate that Biden’s victory could lead to a better trade relationship with the US and China and another economic stimulus package could be expected.
“To some extent, it can also be driven by some hedging by market participants who may have anticipated that the election result would create selling pressure,” says Davids.
The dollar weakened as investors ditched safe-haven assets following the Pfizer announcement, sending the rand up 2.5%.
Read: Pfizer’s Covid Vaccine Prevents 90% of Study Infections
Highlights from various sectors:
The rand’s gains lifted the bank equity index to 8.9 at a five-month high.
- FirstRand rose 13%, Standard Bank 7.7%, Absa 7.7%, Nedbank 6.1, Investec 10% and Capitec Bank 5.1%.
Food and drug vendors increased 7.3%, while general retailers increased 3%.
- Shoprite was up 10%, clicks up 5%, Spar up 5%, Bid Corp up 9%, Pick n Pay up 4.1% and Dis-Chem up 3.1%.
- Mr Price rose 3.9%, Woolworths 3.6%, Foschini Group 2%, Truworths International 5%, Massmart 6.5%, Motus 3.4% and Pepkor 1.8%.
Gold stocks dragged the mining stock index down 0.2% as Pfizer’s announcement saw investors pile on risky assets and ditch havens.
The sub-index for gold stocks was down 9.5%, while bullion was down 2.4%.
- Gold Fields fell 12%, AngloGold Ashanti 7.2% and Harmony Gold 11% after the company released production data for the three months through September.
Platinum companies fell 3.8%.
- Sibanye fell 7.4%, Impala -2.5%, Northam 3.5% and Royal Bafokeng 1.8%.
© 2020 Bloomberg
