Allied Technologies Limited (Altech) will come into focus on an otherwise rand-driven South African stock market next week, with a statement due on its negotiations with cellphone operator Econet Wireless.
Electronics and telecoms group Altech, which has agreed to buy half of Econet for around $70 million, according to a senior industry source, has said it will make an announcement on January 21.
Altech has gained nearly seven percent since news of the possible deal broke on Monday, with the stock hitting a life high of 33.50 rand on Friday, as investors cheered a tie-up that could see cash-rich Altech entering a fast-growing industry.
But some analysts said Altech might not be able to rise much further since the news was already priced into the stock.
Analysts said the wider market would track the volatile rand, with investors switching from retail and financial stocks into rand-hedged resource stocks, a trend which began when the local unit weakened this week.
On Friday, the equities market raced to a 19-month high as the rand careered to a four-month low - enticing investors to foreign exchange-earning firms such as paper group Sappi, luxury goods group Richemont and rand-hedged synthetic fuel firm Sasol.
The FTSE/JSE All Share Index hit a session peak of 11,091.59 points - a rise of 1.6 percent on the day and its best level since early June 2002 - after the rand slipped more than 10 cents to 7.44/dollar. On the week, the market gained as much as 4.9 percent.
"We could see some profit taking next week. We have had a good run, with investors wanting to get into resource stocks.
There is a big of rotation from shares such as retailers, with investors cutting down on winners into resources," one analyst said, adding that the rand would rule the equities market.
Retailers had a strong run in 2003 thanks to interest rate and tax cuts that boosted consumer spending.
A weaker rand could mean that the tide may have turned for resource firms, which would gain as most translate their forex-earned profits into the local unit when they report their results.
In 2003, most of these companies projected losses and threatened job cuts after the rand gained 28 percent.
Mining giants Anglo American Plc, peer diversified miner BHP Billiton, world number one platinum miner Anglo American Platinum, and smaller rival Impala Platinum, should benefit if the rand stays weak.
The four together, accounting for more that 30 percent of the market's capitalisation, tend to sway the market on rand moves.
"We will see if Sasol will hold the 110-rand level, whether Anglo will maintain 161 rand and Billiton at 62 rand. It all depends on whether the rand pulls back lower," another analyst said.
South Africa's biggest gold producers, AngloGold, Gold Fields and Harmony Gold, which gained despite a lower spot bullion price on Friday, would also track the mood of the local currency, analysts said.