Investor sentiment brightens for South African platinum miners as prices rebound
Image: Gianluigi Guercia / AFP
Tawanda Karombo
Investor sentiment towards South African platinum miners has shown a marked improvement recently, buoyed by a significant rise in platinum prices, signaling a potential shift in the market landscape.
After enduring a protracted period of depressed investor interest driven by low prices and concerns about the market's stability—largely influenced by the increasing popularity of electric vehicles—platinum group metals are experiencing a notable resurgence.
Mining analyst Keenen Du Toit this week said that the platinum prices this month 'jumped to $1 300 per ounce – the highest since 2014' although 'still significantly lagging the big move up' in gold.
'Historically the PGM basket price has traded closely to gold, and even above in many cases,' said Du Toit.
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Now, South African fund managers surveyed by Bank of America (BofA) Securities said on Tuesday that investors have become overweight on platinum. This represents one of the biggest shifts as the fund managers positioning on platinum shifted from underweight to overweight.
'Biggest gain in platinum sector positioning,' said BofA in its June 2025 South Africa fund manager survey. This high positioning for platinum was 'relative to history in software, gold, retail and food producers and bonds.'
This is despite the World Platinum Investment Council recently saying full-year output will still be 6% lower than last year 'since South African producers will not benefit from the large drawdown of work-in-process inventory that occurred' last year.
Besides the inclination towards platinum, South African fund managers have exhibited 'low positioning' in healthcare, offshore, telecom and cash. The biggest falls were recorded for heavy industrials and cash.
The latest survey marked the return of rand hedges, with a net 30% of managers overweight on equities after moving overweight to bonds and underweight on cash.
'They want to invest cash. Preferred sectors are banks, apparel retail, software (while they) disliked healthcare, real estate, food producers,' noted the BofA report.
'Resources (platinum, chemicals, miners) gained over local defensives like food producers, healthcare, life insurance).'
A higher net of 50% of managers surveyed said they see the South African equity market as undervalued while a slightly higher net of 60% see more 'Buy' than 'Sell' opportunities, noted the report.
In terms of government reforms, 15% of surveyed fund managers see 'reforms accelerating' against a peak reading of 56% for September 2024.
Many fund managers cited 'weak earnings' as a major concern while they also see 'weak consumer on the radar' despite policy shifts to the left easing.
Fund managers moved overweight on South African bonds, with fewer wanting to buy government bonds again this month.
Surveyed respondents were in consensus that the South African repurchase rate (repo rate) will bottom in the third quarter, while they expected the country's 10-year yields to trade at 8.97% if the 3% inflation target is maintained.
'Economic optimism slightly more positive. +12M yield curve forecast falls 25 basis points. South Africa, we need reform and growth, to put South African citizens first, and a weaker dollar (outside a global recession),' BofA said.
Alongside this, South Africa's fiscal dominance concerns were elevated compared to historically, despite showing improvement recently with weaker dollar and rising precious metal prices.
Managers now expect a firmer rand, lower bond yields and a lower repo rate of nearly two 25 basis points cuts from today.
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