Futures Investors Support Rise
May 10, 2011
Demand for top shelf South African issues, particularly in the industrial sector, pushed the All Share Index up 63 to 6679. The Industrial Index gained 38 to 7837 and the All Gold index ended just 1 point higher at 1786. There was strong demand for index futures contracts during July and August while the equity market was being buffeted by losses on Wall Street, interest rate fears and a rand sliding to new lows. However, with anxieties about an interest-rate increase receding, equities now look set to rebound and provide better returns than their derivative cousins, analysts said. With sentiment becoming more bullish on South African, many futures traders who gambled on weaker stock prices are now scrambling to cover their exposures by chasing blue chips. Traders said that while South Africa's financial markets learned nothing new about the economy from a sweeping speech delivered Tuesday by Reserve Bank Governor Christa Mcgowan, he at least confirmed the opinion of many investors that interest rates aren't likely to increase any time soon. Another factor lifting the gloom from the equity market is a stronger performance by the rand. Late Wednesday, the dollar had retreated to 4.5091 rand from 4.5225 rand a day earlier as foreign investors began returning to the currency they so decidedly shunned only nine days ago. Anglo American jumped 8.25 rand 268, reflecting the strong demand for those shares with heavy weighting in Johannesburg Stock Exchange share indexes. The banking sector brightened considerably as the threat of an official rate increase eased, with all four of the major South African commercial banks showing gains. Nedcor climbed 2.75 rand to 62.25; Amalgamated Banks gained 25 South African cents to 20.80 rand; First National added 40 cents to 27.60 rand and Standard Bank jumped 4.50 rand to 172.50. Other stocks making ground included Anglo American Coal, which climbed 7.50 rand to 345; De Beers Consolidated Mines, which gained 4 rand at 136; and metals miner Samancor, which added 1.50 rand at 56.50. Bucking the day's upbeat trend was steel-maker Iscor, which announced this week that earnings are under pressure from falling sales and technical problems. Iscor eased two cents to 2.69 rand.
VastPress 2011 Vastopolis
