Metals, Miners Recovery Lifts South Africa ETF

  • South African mining companies experience their best month in 17 years
  • Miners enjoy improved margins due to a surge in prices on raw materials
  • However, South Africa’s mining industry remains vulnerable to slowing global growth

The rally in global miners fueled a surge in South Africa’s equities market and country-specific exchange trade fund, with South African mining companies experiencing their best month in 17 years.

The iShares MSCI South Africa ETF (NYSEArca: EZA) gained 5.8% Tuesday and jumped 25.2% since the January lows.

South African markets are being supported by the strengthening miners group. The 16-member FTSE JSE Mining Index rose 24% in February, the most since April 1999, reports Neo Kanyile for Bloomberg.

South African miners have been enjoying improved margins due to a surge in prices on raw materials like iron ore and platinum while the rand currency depreciated against the dollar.

Over the past month, the iPath Dow Jones-UBS Copper Subindex Total Return ETN (NYSEArca: JJC), an exchange traded note that tracks copper price movements, rose 3.8% and the ETFS Physical Platinum Shares (NYSEArca: PPLT) increased 7.5%.

The improving commodities market is lifting South African mining stocks from a 11-year low in January that diminished shares of the Top 40 Index to 6.3% from 37% a decade ago.

However, Grant Cullens, chief executive of African Alliance, warned investors from becoming too complacent with the recent rebound as global growth prospects do not warrant excessive optimism.