South African stocks rose on Friday as demand for safe-haven investments increased amid rising worries about global economic growth. Gold mining companies and other gold-related stocks were the biggest beneficiaries as gold prices gained amid increased risk-off sentiment. Investment holding companies were also among the top gainers, with investors seeking refuge in these companies’ assets, which generate stable income.
The FTSE/JSE Africa All Share Index rose 0.8%, while the FTSE/JSE Africa Gold Mining Index gained 1.5%. Gold Fields climbed 2.8%, Sibanye Stillwater rose 2.7%, and AngloGold Ashanti advanced 0.8%.
The mining sector has received a boost from rising prices and continued production declines. Analysts have noted that due to the volatile global financial environment caused by the US-China trade war, investors are seeking refuge in the yellow metal. “Gold prices remain well supported, while miners are being aided by continued fiscal and electricity supply constraints, resulting in low production growth,” said Gryphon Asset Management executive chairman Andrew Joannou.
Investment holding companies also enjoyed a strong session, with Naspers up 2.3%, Investec gaining 1.4%, and Remgro adding 3%. These companies have performed well as investors seek out assets which can offer stable income streams in a low interest rate environment.
The energy sector was also in the green despite a fall in oil prices on Friday. The FTSE/JSE Africa Energy Index rose 0.5%, with Sasol up 1%, Global Oil & Gas up 0.6%, and Sibanye Oil & Gas rising 1%. In other sectors, the FTSE/JSE Resources Index gained 0.3%. Kumba Iron Ore climbed 2.1%, and Northam Platinum rose1.3%.
The outlook for South African stocks is uncertain amid ongoing challenges. The weak economy and political uncertainty are weighing on the market while external factors such as Brexit and US-China trade tensions continue to drive volatility. “The economy continues to struggle in the face of a difficult economic, structural and political environment and market sentiment is likely to remain vulnerable to external catalysts,” Investec Asset Management said in a note
The South African rand weakened on Friday, trading at R14.14 to the dollar. While the rand has weakened in recent weeks, it is still up in the year to date, and analysts say it is at a more manageable level.
Overall, South African stocks were slightly higher on Friday, as investors sought refuge in safe haven investments amid ongoing global economic concerns. Gold miners and investment holding companies were the biggest beneficiaries, while energy stocks managed to stay in the green despite a dip in oil prices. However, continued political and economic challenges in the country will continue to weigh on the market in the near term.
