South African stocks have their noses in front of emerging-market peers, but glum news from China threatens to weigh on the key mining sector and stymie that outperformance.

Johannesburg’s main equity index has climbed about 7% in 2024 in dollar terms, outshining the 4.6% advance for MSCI Inc.’s gauge of emerging-market stocks. Miners aren’t helping, with the sector dragged lower by worries over weaker demand from China, the biggest customer for South Africa’s industrial metals.

Iron ore touched the lowest level in almost two years this week, battered by the continued crisis in China’s property market. Seven of the 10 worst-performing Johannesburg stocks this year are mining companies.

"The mining stocks will continue to see a little bit of short-term pain until we see a full-on China recovery," Tana Mongwe, an analyst at Old Mutual Investment Group in Cape Town, said in an interview.

Optimism flowing from South Africa’s elections in May and prospects of lower interest rates have propelled the FTSE/JSE Africa All Share Index to record highs. Yet an index of Johannesburg-listed industrial miners has dropped 14% this year, with Anglo American's Kumba Iron Ore leading the retreat with a 46% slump.

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