South Africa's benchmark equity market has climbed to its highest capitalization since 2019, supported by a stronger rand and rising metal prices, per Bloomberg report.
The total value of shares on the FTSE/JSE Africa All Share Index rose above $500 billion on Tuesday, overtaking markets such as Norway, Malaysia, and Turkey compared with the same period a year earlier.
The rand is trading at its strongest level against the dollar in more than 3 years, with volatility measures showing little sign of investor stress. The currency gained 14% against the dollar in 2025 and has continued to extend those gains this year.
Support has come from record-high precious metal prices and improving investor sentiment following economic reforms and a credit rating upgrade by S&P Global Ratings in November.
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While technical indicators such as the Relative Strength Index suggest the rand is overbought, options markets indicate limited concern about an imminent reversal. Expected swings in the rand-dollar exchange rate over the next 6 months have fallen to the lowest level in almost 25 years. The cost of hedging against rand weakness is the lowest since October.
"I think the rand can maintain its strong performance," said Sergei Strigo, a portfolio manager at Amundi UK Ltd.
Investor confidence has also pushed South Africa's 10-year local-currency bond yield to its lowest level in a decade.
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Key Takeaways
South Africa is benefiting from a rare alignment of supportive global and domestic factors. Higher gold and precious-metal prices have improved the country's terms of trade, strengthening the currency and lifting mining-heavy equity valuations. Lower bond yields and falling credit-default swap costs signal a decline in risk premiums, making South African assets more attractive to global investors.
At the same time, expectations of US interest-rate cuts have weighed on the dollar, amplifying gains in high-yielding emerging-market currencies. The rand has delivered a 3.8% return in the dollar-funded carry trade over the past month, the highest among emerging-market currencies tracked by Bloomberg. Some traders now favor the rand over peers such as the Mexican peso and Brazilian real due to regional political risks elsewhere. "Carry-trade positioning will provide support heading into the new year," said Hironori Sannami, a foreign-exchange trader at Mizuho Bank. If current conditions persist, currency strength and lower funding costs could continue to underpin South Africa's equity and bond markets in the months ahead.
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