South African stocks are heading for their best first-half performance in almost two decades, and precious-metal prices could pave the way for further gains.

The FTSE/JSE Africa All Share Index is up 14% this year, on track for its biggest first-half advance since 2006. In dollar terms, it’s up 21%, outperforming both the MSCI Emerging Markets Index and the S&P 500.

A net 70% of fund managers in a Bank of America Corp. survey conducted earlier this month are bullish South African equities, up from 50% in the previous poll. Gold mining is among the most overweight sectors relative to history, while platinum producers swung from high underweight to high overweight, the survey showed.

Economic reforms driven by South Africa’s coalition government are also boosting sentiment, while subdued inflation is giving the central bank room to ease monetary policy further. That could attract more foreign investors to South African stocks — which are cheap relative to emerging-market peers — as they seek alternatives to the US.

“If a few stars align such as continued fund flows toward EMs and structural reforms in South Africa pick up some pace at the same time with a continued broader recovery in global commodity prices, then our market could continue to push higher,” said Peter Takaendesa, chief investment officer at Cape Town-based Mergence Investment Managers Ltd.

The largest contributing sector to the gains is the FTSE/JSE Precious Metals and Mining Index, which has soared 74% this year. Gold has surged, hitting multiple record highs, as investors look for haven assets amid geopolitical tensions and inflation concerns. Platinum — South Africa’s biggest export — is up 52% and trading at the highest since 2014.

Rates volatility and a weaker US dollar should keep gold supported, especially if the US Treasury or the Federal Reserve are forced to step in to support markets, according to Michael Widmer, Bank of America’s head of metals research. “We see a path for gold to rally to $4 000/oz over the next 12 months.”

Such a move would sustain share prices of South African gold miners including AngloGold Ashanti, Gold Fields and Harmony Gold Mining, all of which have gained more than 60% this year.

Platinum miners Sibanye Stillwater — which is up 116% this year — Northam Platinum Holdings and Impala Platinum Holdings are also poised to extend gains amid concerns about a supply shortage for the metal.

Aside from precious metals, fund managers in the Bank of America survey also favored banks, clothing retailers and software stocks, while being underweight health care, real estate and food producers.

“We’re maintaining an overweight to South African equities in multi-asset portfolios,” said Izak Odendaal, chief investment strategist at Old Mutual Wealth. “The asset class remains attractively priced, and there is still room for earnings growth to improve for the locally-focused shares as structural reforms raise the economy’s growth potential over time.”