By Anait Miridzhanian and Rachel Savage
JOHANNESBURG (Reuters) -The Johannesburg Stock Exchange hit an all-time high on Monday as South African technology and mining stocks gained on enthusiasm about China reopening its borders and hopes the U.S. Federal Reserve may slow the pace of interest rate hikes.
The all-share index rose to as high as 78,624 points before closing at 78,342.7 points, about 1.93% higher than the previous close. The blue-chip index of top 40 companies also reached an all-time high, of 72,514.6 points and ended up 2% at 72,223 points.
Mining companies were among the big winners, with the mining index up 1.31% at 61,074.5 points, as prices of basic materials rose on the hope that China’s economy will rebound after COVID-19 policies dampened demand, and as a weaker dollar boosted gold prices.
“The market is expecting that U.S., UK and Europe will enter a mild recession and that will lead to a cut in interest rates in the second half,” said Wayne McCurrie, a portfolio manager at First National Bank.
“Another factor that is helping the South African market is China just abandoning its zero-COVID policy over the weekend and that impact is seen in the mining stocks on the market, as well as Naspers.”
Tech investor and market heavyweight Naspers Ltd, through its subsidiary Prosus, holds a 27% stake in Chinese tech and gaming giant Tencent and is its biggest investor. Shares of Naspers jumped 3.93%, while Prosus climbed 3.52%.
Improved risk sentiment also boosted the rand, which at 1530 GMT traded at 16.96 against the dollar, 0.92% stronger than its previous close.
ETM Analytics attributed the rand’s recovery to last week’s strong U.S. labour market data and more measured views of indications that the government may try to change the South African Reserve Bank’s (SARB) mandate.
“Talk of changing the SARB’s mandate is not necessarily something to fear,” ETM said in a note, after the currency was hit on Friday by the prospect of a change in the central bank’s mandate.
Gwede Mantashe, chairman of the governing African National Congress (ANC), said on Friday that it wanted to expand the SARB’s mandate to do more to support the economy, prompting the rand to fall during the session.
The central bank’s focus, spelled out in the constitution, is “to protect the value of the currency in the interest of balanced and sustainable economic growth”.
The government’s benchmark 2030 bond was stronger, with the yield down 26 basis points at 9.74%.
(Reporting by Anait Miridzhanian, Rachel Savage, Promit Mukherjee and Bhargav Acharya; Editing by Alex Richardson, Conor Humphries and Susan Fenton)
