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SA stocks to sizzle in 2011: Analysts

Johannesburg - South African blue-chip stocks are expected to continue their recent rally and add another 5% by mid-2011, buoyed by demand for dividends and commodity companies, a Reuters poll showed on Wednesday.

Johannesburg's Top40 index is expected to reach 29 600 by the middle of 2011, a poll of ten traders and analysts showed, compared with Tuesday's close of 28 317.92.

"Investors are looking for yields and there are many shares that are offering good dividend yields with a possibility of capital gains, this is better than yields on cash," said Martin Lentsoane, a trader at News Trading in Johannesburg.

"Growth in China and India should continue to benefit the commodity markets."

The forecast was revised up slightly from the 29 500 level predicted in a similar poll in September.

The commodity-heavy index is expected to finish 2011 at 31 000, a 9.5% gain from Tuesday's close. The Top40 is on track to book a 13% rise for 2010.

While data last month showed South Africa's economy grew by a lower-than-expected 2.6% in the third quarter, the mining industry was the best performer, and only the mining and agriculture industries saw the pace of their growth speed up from the second quarter.

Miners such as Anglo American [JSE:AGL] and AngloGold Ashanti [JSE:ANG], the world's third-largest gold miner, are among the largest companies on the Top40 index in terms of market value.

Stronger corporate earnings are expected to help lift the index, the poll showed.

"We expect relatively strong earnings and dividend growth from most companies in the JSE Top40," said Alexander Duys, a portfolio manager at Dynamic Wealth in Pretoria, although he warned many of those expectations could already be priced in.
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19.00
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Rand - Pound
23.95
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Rand - Euro
20.50
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Rand - Aus dollar
12.34
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