SA stocks rise, market awaits MPC decision

JOHANNESBURG (Reuters) – South African shares gained for a second straight session in line with global markets on Monday and eyes will be turning this week to the domestic central bank, which will make an interest rate decision later this week.

Shoprite gained the most amongst blue-chips, adding nearly 3 percent, after it said stores outside its key home market boosted annual sales. Monday's gain was the grocer's biggest daily percentage rise since the beginning of April.

"The shares got oversold a little bit in recent weeks, but this update came in broadly in line with expectations and that gave some people a reason to pick up it up again," said Alex Sprules, an analyst at brokerage Imara SP Reid.

Retailers such as Shoprite will be sensitive to the central bank's Monetary Policy Committee statement and meeting, which will be released on Thursday.

A Reuters poll showed most of the 31 economists surveyed expect the Monetary Policy Committee to hold rates at 5.5 percent, but seven of them expect a hike of 25 basis points and another six see a 50 point increase.

"All eyes are on the reserve bank this week. We are not going to make new highs until such a time and certainly not going to break new lows," said Wilmar Buys, a portfolio manager at FFO Securities.

Markets have priced in a hike of 25 points and anything higher than that would be a shock on South Africa's strapped consumers and equities markets would react negatively to that, he said.

The Top-40 index added 0.8 percent to 46,433, while the All-share rose 0.7 percent to 51,540. Both remain within range of recently scaled life highs.

Another retailer, Woolworths, also rose, lifted by news that shareholders of David Jones, an Australian retailer it is hoping to acquire for $2 billion, had okayed the deal.

Woolworths' shares added more than 2 percent to 82 rand.

Overall activity was somewhat muted with about 145 million shares trading owners. Advancers outpaced decliners 178 to 127.