The South African stock market has risen for 12 consecutive months, reaching a historic high. Bank of America states that there is still room for growth due to the boost from gold prices and exchange rates

The South African stock market has set a record for the longest consecutive rise since records began in 1995. Bank of America stated that the surge in commodity prices and the strengthening of the rand have created a rare resonance, and the market still has further upside potential.

On Monday, the South African benchmark index reached an all-time high, buoyed by rising gold and silver prices following attacks by the U.S. and Israel on Iran. Although the index subsequently retreated, its performance still outpaced the broader emerging market index. John Morris, a strategist at Bank of America for South Africa, stated that the South African market is benefiting from a rare resonance of global and domestic positive factors, particularly high metal prices and expectations of a weaker dollar.

"We are in a sweet spot," John Morris said in an interview, "this combination is rare, and we still have room to rise." He believes that the commodity cycle will continue to support the market for the next 12 to 15 months, and the rand may strengthen further, thereby lowering bond yields and supporting banks and other domestic sectors.

The escalation of the situation in the Middle East has not changed his positive outlook on the South African market. He pointed out that precious metal prices remained strong on Monday, which is a key positive factor for the South African market.

12 Consecutive Months of Gains, Setting the Longest Record Since 1995

The FTSE/JSE Africa All Share Index has risen 44% over the past year, with the most significant gains in metal and mining stocks. This index has recorded positive returns for 12 consecutive months, marking the longest streak since Bloomberg began tracking in 1995. In February, the monthly gain reached 7%, the largest monthly increase in over two years, and also the best-performing February for the South African stock market since the global financial crisis.

John Morris stated that global and domestic positive factors have rarely synchronized to support this historic rally.

The strong performance of commodities is the core driving force behind this rally. Over the past year, gold prices have risen by 86%, and platinum has surged by 146%, both providing solid support for the South African stock market.

"This is the decade of resources, and U.S. inflation remains high," John Morris said, "it feels like we are back in the 1970s." He believes that the current commodity cycle has the foundation to continue for 12 to 15 months, which is sufficient to sustain the performance of South African-related sectors.

Growth Remains Modest, Excess Returns Hard to Replicate

In addition to commodities, the performance of the rand is also an important factor supporting the South African market. Over the past year, the rand has appreciated by about 15% against the dollar. John Morris believes the rand is still undervalued and is expected to strengthen further, which will drive bond yields down and benefit domestic industries such as banking.

He stated that rising commodity prices will drive the rand stronger, thereby boosting the profits of South African domestic companies. Financial and industrial stocks are expected to achieve considerable returns as they catch up with mining stocks. Additionally, he believes that the latest budget announced in South Africa "further supports the logic of investing in domestic assets."

John Morris also emphasized that this bull market is not without limits. Although falling inflation may provide room for the South African Reserve Bank to cut interest rates, aiding the cyclical recovery, current economic growth remains moderate, and reforms are progressing gradually. **

"You will not achieve the same excess returns as last year," he stated, "but the market's direction is still upward, with fluctuations in between." In his view, the structural support of the South African stock market still exists, and investors need to maintain appropriate expectations for short-term pullbacks while grasping the overall trend