JPMorgan Sees Further Upside for South African Stocks Amid Economic Recovery

South African stocks are expected to continue their rally in the second half, driven by an improving domestic economy and supportive monetary policy. JPMorgan and Goldman Sachs see more upside for local equities, with strong precious-metal prices and lower oil prices boosting the rand. The analysts expect South Africa Inc. shares to benefit from local economic tailwinds, with names such as Mr Price Group, Capitec Bank, and AngloGold Ashanti favored.

South African stocks are poised to extend their rally in the second half of 2025, driven by an improving domestic economy and supportive monetary policy. Analysts at JPMorgan Chase & Co. and Goldman Sachs Group Inc. expect more upside for local equities, with strong precious-metal prices and lower oil prices boosting the rand [2]. The analysts predict that South Africa Inc. shares will benefit from local economic tailwinds, with names such as Mr Price Group, Capitec Bank, and AngloGold Ashanti favored.

The FTSE/JSE Africa All Share Index has already seen a 23% increase in dollar terms this year, outperforming both the MSCI Emerging Markets Index and the S&P 500 [2]. JPMorgan analysts Inga Galeni and David Aserkoff attribute this performance to a combination of factors, including strong global risk appetite, softer US inflation data, and improving domestic economic indicators [1].

The passage of the national budget in June has also helped ease investor concerns about the stability of the coalition government, further boosting market sentiment [2]. The increasing credibility of the reform agenda is expected to drive long-term growth and improve investor sentiment.

OPEC+'s recent decision to hike oil production by 548,000 barrels per day in August 2025 is also likely to support the South African economy. The move aims to return their total oil output to 2.2 million barrels per day, which they had cut back in 2023 [3]. Lower oil prices are expected to boost South Africa's terms of trade, providing a supportive backdrop for domestic equities.

While the political backdrop remains fluid, the passage of the national budget has marked peak uncertainty, diminishing the risks of a coalition collapse [2]. The increasing credibility of the reform agenda is expected to drive long-term growth and improve investor sentiment.

So-called rand-hedge stocks, which protect against a decline in the South African currency due to their foreign earnings or offshore listings, are losing appeal as the dollar's weakening trend boosts emerging-market currencies [2].

In conclusion, South African stocks are expected to continue their rally in the second half of 2025, driven by an improving domestic economy, supportive monetary policy, and favorable global economic conditions. Investors will be watching closely as the next chapters of this emerging-market currency story unfold.

References:
[1] https://www.fxleaders.com/news/2025/07/06/south-african-rand-usd-zar-breaks-lower-eyes-r17-amid-trade-talks-and-fed-cut-bets/
[2] https://www.bloomberg.com/news/articles/2025-07-07/jpmorgan-goldman-sachs-see-more-upside-for-south-african-stocks
[3] https://www.outlookbusiness.com/markets/oil-prices-to-drop-further-as-opec-announces-large-output-hike