South African Stocks Outshine Peers But China Woes Threaten Mining Sector

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Southafrica,Stocks,Mining

While the Johannesburg Stock Exchange has outperformed its emerging-market peers this year, concerns over weak Chinese demand are weighing on the mining sector. Despite optimism surrounding South Africa's recent elections and potential interest rate cuts, miners have been hit hard by the ongoing crisis in China's property market.

South African stocks have their noses in front of emerging-market peers, but glum news from China threatens to weigh on the key mining sector and stymie that outperformance.

"The mining stocks will continue to see a little bit of short-term pain until we see a full-on China recovery," Tana Mongwe, an analyst at Old Mutual Investment Group in Cape Town, said in an interview. It mirrors the picture in Europe, where basic resources stocks are the biggest laggards in the regional Stoxx 600 benchmark. Slow progress in China’s efforts to tackle an "The market is a little bit worried around China and its weakness, particularly with regards to property and the impact that’s having on iron ore," said Unathi Loos, a portfolio manager at M&G.

Business and consumer confidence have been buoyed by the potential for an easing in the energy and transportation network snarl-ups hobbling the economy, along with the prospects for interest-rate cuts.

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