S. Africa Stocks Close at Near 3-Year High After Hitting Record

South African stocks closed at the highest since May 2008 after touching an intraday record as metals climbed on a surprise increase in China’s copper imports.

The FTSE/JSE Africa All Share Index rallied as much as 1.2 percent to 33,334.55 and closed 0.4 percent higher at 33,094.06 as of 5 p.m. in Johannesburg. BHP Billiton Plc, the world’s largest mining company, gained 1.7 percent to 297.01 rand, while Anglo American Plc advanced 0.7 percent to 395.70 rand.

“Psychologically this is a great move because it means there’s a bit of money being put in the market,” said Patrick Mathidi, a portfolio manager with MMI Asset Management. “In terms of valuations, I wouldn’t rush in to the market at this stage. It becomes very dangerous to follow the market at these levels, especially when you still don’t have conclusive answers on the debt situation in Europe,” said Mathidi by telephone from Johannesburg.

China’s copper imports rebounded 5.7 percent in January from the previous month as fabricators increased stockpiles ahead of a seasonal ramp up in production after the Lunar New Year. Copper climbed 1.8 percent on the London Metal Exchange. Lead, nickel, tin and zinc also gained.

MMI’s Mathidi, who helps manage almost 200 billion rand ($27 billion) in funds, advises investors to buy diversified resources companies, including Anglo American Plc and BHP Billiton Plc. Retail and most banking stocks are the best candidates for selling, with the exception of Standard Bank Group Ltd., Africa’s largest lender, which he recommends buying at its current price of 12.60 times earnings.

‘Stretched’

“In terms of valuations, we’re concerned the market’s a little stretched,” Kevin Lings, an economist at Stanlib Asset Management in Johannesburg, said by telephone.

For the All-Shares Index to keep trading at average of 16.3 times annual earnings, the domestic economy must create jobs at a faster pace, Lings said. Manufacturing growth eased to 0.2 percent in December, the slowest pace in 13 months, the government said Feb. 10.

Stanlib Asset Management tends to hold shares of large diversified resources companies and is avoiding gold stocks, Lings said.

The rand will likely weaken to 7.70 to the dollar by the end of the year, said Lings.

To contact the reporter on this story: Sikonathi Mantshantsha in Johannesburg at smantshantsh@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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