Johannesburg Buoyant equities are expected to surge this week, amid hopes of an imminent rate cut and feverish takeover speculation, although some investors reckon the rally might stall.
The FTSE/JSE Top40 index has set a string of record highs in recent weeks and investors say low interest rates, keen consumer demand and takeover interest from foreign predators mean stocks are still looking fairly cheap.
On Friday, the Top40 hit an all-time high of 11 353.16. Having gained 21.8 percent this year, this blue chip index is one of the best-performing stock indices in the world in 2004.
But some dealers said that after tacking on 1.5 percent last week, driven by financials, retailers and telecoms companies, the index might lose ground as investors booked profits.
Desmond Reilly, a dealer at PSG Konsult, said: «The underlying strength is still there and I wouldnt say South African equities are overvalued, but we have maybe pulled ahead a bit too fast too soon and we might see a pullback.»
Market participants would be watching the rand and looking out for any hints from policy makers as to whether the central bank would cut interest rates when it meets in early December.
Corporate news looks fairly thin, and all eyes will be on gold mining company Harmonys hostile takeover bid for rival Gold Fields when results of the first-stage offer for up to 34.9 percent of Gold Fields is published today.
Greg Davies of Anglorand Securities said: «Things should be quite eventful on that front. The market is expecting Harmony to raise its bid, but it looks as if Gold Fields will try to bog the whole thing down in the courts until the market loses interest.»
South Africas biggest media company, Naspers, is expected to post a sharp increase in first-half earnings today.
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