After an ugly year, the JSE may be set to rally

Global optimism

The upshot is that global analysts are optimistic on how South African companies will perform in 2019. They’re predicting a 21% increase in local-currency earnings, compared with this year, the highest among major emerging markets after India, according to UBS Group.

Bank of America Merrill Lynch is among those recommending that clients go long South African equities, saying the rand will benefit if, as it expects, global trade tensions ease.

“The stage is set for a relief rally in SA equities,” Mary Curtis, RMB Morgan Stanley’s chief stocks analyst in Johannesburg, said in a note on December 3. “Year-to-date outflows have been significant, technicals are supportive, valuations are cheap and the policy measures in China, plus recent détente between China and the US on trade, indirectly support SA via the resource sector and China-exposed stocks.”