South African stocks retreat from record high, Abil soars

JOHANNESBURG (Reuters) – South Africa's main stock index set a record high on Monday before losing steam to end slightly lower, as investors took their cue from a downbeat mood in major overseas markets.

But African Bank Investments (Abil) surged after the lender said it was in talks to sell its money-losing furniture retail unit.

One of the worst performing stocks on the bourse this year, Abil soared 17.4 percent to 7.90 rand as investors welcomed the possibility of fresh capital for the lender hammered by bad debts and a credit downgrade.

Investors have been snapping up local equities in recent weeks, unfazed by strikes that have further hurt Africa's most advanced, but ailing, economy.

"It's 'a rising tide lifts all' scenario," said Greg Katzenellenbogen, director at Sanlam Private Investments, "South Africa has been benefitting from the risk-on environment for emerging markets."

Emerging markets have once again become must-haves in yield-hungry fund managers' portfolios as interest rates in the West remain low and the outlook for the Chinese economy shows signs of improvement.

But charts suggests that both of South Africa's indices have limited upside, with their slow stochastic – a widely watched momentum indicator – showing they have strayed into an overbought territory.

The JSE All-share index, the broadest measure of South African stock market performance, inched down 0.35 percent to 51,877, pulling back from a record 52,125 set earlier. The blue-chip JSE Top-40 was down 0.44 percent at 46,873.

Among decliners, Tsogo Sun dropped 3.2 percent to 25.83 rand after the casino and hotels firm said its major shareholder will sell a $1 billion stake.

Impala Platinum gave up 1.3 percent to 111.30 rand after the platinum producer said about 2,000 workers went on a wildcat strike over higher pay.

Trade was relatively slow with about 154 million shares, changing hands, according to bourse data, compared with last year's daily average of 176 million.

Decliners outnumbered advancers, 168 to 138, while 57 shares were unchanged.