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Johannesburg - The Johannesburg Stock Exchange has reached
record highs despite forecasts of a fall amid the global crisis and deadly
strikes at a platinum mine, where police opened fire on strikers.
The JSE's All Share [JSE:J203] Index rose 0.29% on Monday to reach
35,897.69 points - a historical mark - while the Top 40 Index also rose 0.26%
to its best-ever level.
The two indexes of Africa's largest stock exchange have both
jumped 12% since the start of the year.
The phenomenal growth surprised analysts, especially after
44 people were killed at Lonmin's Marikana platinum mine two weeks ago - of
which 34 were gunned down by police.
Production at the world's third platinum producer has been
at a standstill since the wildcat strikes for higher wages started on August
10.
"At first glance, it seems quite odd," said
Richard Schellbach from Citigroup in Johannesburg.
"The global economy is not doing well, and the South
African economy is declining, or actually is not growing as much as we thought
it would," he added.
Nedbank analyst Dennis Dykes said the news meant little in
the current economic climate.
"As far as the JSE is concerned in terms of boasting,
it is not necessarily a cause for happiness," he said.
South Africa, the continent's largest economy, has had to
review its economic growth forecast downwards by 1.5 percentage point to about
2.6% this year, the analyst said.
Heavily sensitive to conditions in Europe, the country has
been hard hit by the global financial downturn.
The radical left of ruling African National Congress has
consistently insisted on the nationalisation of mines and redistribution of wealth.
Such constant manoeuvring would usually unnerve investors.
Meanwhile the Lonmin strikes have highlighted the dismal
conditions which mineworkers face, which could spark similar protests at other
mines in the sector.
Some brokers however point out the Marikana unrest has dragged down the exchange rate of national currency, the rand. This in turn favoured exporters, especially of raw materials, which are priced in dollars.
Dykes also highlighted external factors, like the US Federal
Reserve Bank's upcoming symposium at Jackson Hole or the European Central
Bank's expected actions to regulate the eurozone crisis.
Despite troubles in South Africa's mining sector "all
the other sectors you don't necessarily think of have done exceptionally
well" on the JSE, said Schellbach. Many companies in healthcare, general
retailers and media were "well-managed and prudent", he added.
"The local consumer is still able to borrow, he is
still able to spend," says Ryan Seborne of 36One asset management.
"The balance sheets are in a good shape."
Shaun Murison of IG Markets South Africa agreed.
"The recent retail trade sales figures released, show
year-on-year growth of 8.3%, which has been reflected in good earnings and
consensus beats in the individual company results, supporting the local and
foreign investment within the sector," he said.
Share prices of retailers Woolworths, Foschini and Mr Price
rose by 40% since January, he pointed out.
"This has helped offset the drawdown of a heavy resource sector suffering from a multitude of problems ranging from violence to (weak) demand."
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