South Africa stocks advance as Bidvest jumps

September 1, 2014

JOHANNESBURG (Reuters) – South African stocks ticked higher on Monday, as Bidvest Holdings advanced after the industrial conglomerate said it could list its food unit in London, a potential windfall for investors.

But gains were limited by concerns Johannesburg stocks are overheated after a series of record highs this year and worries about lacklustre growth in Africa’s most developed economy.

“We’re quite fully valued across the board,” said Abri du Plessis, a portfolio manager at Gryphon Asset Management in Cape Town. “We’ll probably have to steel ourselves for another year of less-than-great profits.”

The benchmark Top-40 index finished up 0.27 percent at 45,752, while the broad All-Share index added 0.3 percent to 51,113.

Both indices have repeatedly hit record levels this year.

The Top-40 is hovering at a price-to-earnings ratio of 18.3, making it the fifth-most expensive of 27 emerging stock markets indices, according to Thomson Reuters data.

Bidvest, a conglomerate that spans shipping to office furniture, said it is considering a London stock market listing for its food business.

The company has long acknowledged the need to separate that unit from the rest of the group, saying its true value has not been reflected fully reflected in Bidvest’s share price.

Shares of Bidvest rose 2.5 percent to 288.34 rand, becoming the biggest percentage gainer on the Top-40 index.

Retailer The Foschini Group rose 1.6 percent to 116.90 rand.

The clothing retailer said its cash sales increased by around 20 percent in the first five months of its financial year – a sign it is cutting exposure to the troubled consumer credit market.

Retailers such as TFG have been on a push to scale back their sales on credit, as souring consumer debt in Africa’s most developed economy has squeezed both banks and retailers.

Trade was slow, with just 124 million shares changing hands according to preliminary data, well below last year’s daily average of 176 million shares.

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