JPMorgan Sees South African Stocks Extending EM Outperformance

SOUTH African stocks have just closed out their strongest first half in 14 years, and JPMorgan Chase & Co. is among those forecasting further gains for 2021.

The benchmark FTSE/JSE Africa All Share Index climbed 12% in the first six months of the year, the best performance since 2007.

That outpaced developing country peers, with MSCI Inc.’s gauge of emerging markets up less than 7%. Johannesburg stocks continue to trade at a discount to the MSCI gauge.

JPMorgan is overweight South African domestic stocks, including banks and general industrial companies, which stand to benefit in a recovery from the pandemic, adding to the tailwinds provided by rallying commodities prices that have boosted stock prices and the local currency.“The outperformance for South African relative to emerging-market focused stocks is not over yet,” John Storey, the U.S. bank’s head of South African equity research, said in an emailed response to questions.

“The