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Johannesburg - Stocks finished in positive territory on Thursday, recovering from an eight-month low hit earlier in the session as investors bet index heavyweights Naspers and Standard Bank had fallen too far in the recent global sell-off.
Johannesburg equities have been hammered this month by worries about the outlook for growth both overseas and at home. The benchmark Top-40 index is down 5.4% in October, on track for its worst monthly performance in 16 months.
Not all stocks recovered on Thursday, with grocer Pick N Pay shedding 2.4% to R51.70, as its rise in first-half profit was overshadowed by concerns about the impact of weak consumer spending.
In many ways, Pick N Pay represents investors' broader concerns about the South African market - robust valuations in an economy grappling with weakening consumer demand.
"When you have a stock priced for recovery and it is in an environment where the consumer is struggling and everyone is fighting over market share, the share price is bound to be under pressure," said Byron Lotter, a fund manager at Vestact.
Valuations suggest stocks could fall further. Despite a weak performance this year, the benchmark Top-40 index is trading at a price-to-earnings ratio of just over 16, making it the seventh most expensive index among 31 emerging market stock indices.
The Top-40 ended the session up 0.53% at 41 794 after earlier falling as far as 40 925, its lowest since February.
The broader All-Share rose 0.45% to 46 881. Both indices staged a recovery in late trade, boosted as US stocks pared losses after a sharply lower open.
That lifted shares of some recent losers, with e-commerce and media firm Naspers gaining 0.8% to R1 179.50.
Naspers, South Africa's largest company by market value, had fallen nearly 7% in the previous five sessions.
Standard Bank, Africa's largest lender by assets, rose 1.2% to R126.93. Its shares have fallen 6% in the last four weeks.
The Top-40 is up just 0.8% so far this year, putting in the bottom 10 of the 31 major emerging market stock indices. In dollar terms it has fared even worse - down 5% for the year, reflecting the nagging weakness of the rand currency.
Trade was active on Thursday, with 247 million shares changing hands, according to preliminary data, well above last year's daily average of 176 million.
