The Rally in South African Mining Stocks Isn’t Done Yet – by Adelaide Changole (Bloomberg News – April 17, 2019)

South African mining stocks have had their best start to the year since 2016 and there’s every chance they are not done yet. The FTSE/JSE Africa Mining Index has gained 22 percent as of April 16 and is close to an eight-year high, helping South Africa’s benchmark gauge advance 12 percent as investors show few signs of nerves before elections on May 8.

The benefits of iron-ore supply disruptions from Brazil to Australia that have crimped shipments and driven prices to the highest since 2014 are clear to see: Kumba Iron Ore Ltd. has jumped 67 percent this year and is among the main index’s biggest winners.

The financial windfall for companies from rising commodity prices looks set to preserve the sector’s allure for investors, said Matthew Shields, an analyst at Avior Capital Markets Ltd. in Johannesburg.

“With balance sheets de-geared, mining companies have the potential to return excess cash to shareholders,’’ Shields said by phone. “These attractive dividend yields should offer support to the sector over the next six months.’’

The mining index dropped 1.9 percent as of 4:19 p.m. Wednesday as iron-ore prices fell amid alleviated supply concerns.

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