Oversold resources shares claw back some ground

STOCKS surged 1.7 percent yesterday, putting the Top40 index within shooting distance of its record high, as investors continued to bet that resources companies such as Anglo American had fallen too far this year.

The Top40 rose 1.71 percent to 37 473.94, its third-highest close on record. The all share index gained 1.49 percent to end at 41 909.39.

“We are still seeing a good recovery in the very depressed metals markets,” said Ferdi Heyneke, a portfolio manager at Afrifocus Securities.

“Because of all the negative sentiment related to labour issues, those share prices have really been under tremendous pressure and the market is now realising that they have been overly discounted.”

Impala Platinum, the world’s second-largest producer of platinum, was the top percentage gainer on the blue chip index, advancing 4.6 percent to R101.54. Resources group Anglo American added 4.1 percent to R222.16.

AngloGold Ashanti rose 1 percent to R129.69 after it said its Tropicana project in Australia had been commissioned ahead of schedule and

3.8% Sasol’s advance on its expectations of a 30% rise in profit

would begin producing gold in the third quarter.

Sibanye Gold strengthened by 5.01 percent to R7.97 and Harmony Gold Mining advanced 3.3 percent to R37.46.

Mediation on wages in the gold mining industry would continue on Tuesday, the Chamber of Mines said.

Resources stocks have been hammered by soaring costs and labour unrest, sending their shares into a tailspin this year. AngloGold, the country’s biggest gold producer, is the worst performer on the Top40 this year, down more than 50 percent.

Petrochemicals firm Sasol gained 3.8 percent to R472 after it said it expected full-year earnings to increase by up to 30 percent, helped by higher production volumes.

More than 150 million shares changed hands yesterday, according to preliminary bourse data. Advancers outnumbered decliners by 185 to 107, with 58 stocks unchanged.