Rand slides, stocks dip

South Africa’s rand was slightly weaker on Thursday ahead of President Cyril Ramaphosa’s State of the Nation address, with investors treading cautiously before hearing the government’s plans to grow a limping economy.

At 17:20 the rand was 0.18% weaker at 14.8770 per dollar.

The currency had been dragged lower in the previous session after data showed retail sales in December fell, but mining output figures on Thursday showed a surprise 1.8% year-on-year gain, helping to lift the gloom around the currency.

Ramaphosa’s fourth parliament-opening speech since he took office in 2018 is being ranked as his most important, as economic growth flounders and government mismanagement persists despite his campaign promises to tackle both.

“We await further clarity on government policies and intended reforms…Transparency and decisive action are key to lift confidence, thereby driving investment and growth,” said Investec economist Lara Hodes.

A Reuters poll on Thursday found inflation would remain well below the upper end of the Reserve Bank’s 3-6% target range, maintaining the attractiveness of the carry yield on the country’s assets compared to most emerging market peers, even with lending rates expected to fall.

There was also a mixed market reaction to power firm Eskom’s announcement that it would spend up to $27 million on severance packages in a bid to cut its ballooning staff costs. Ramaphosa’s speech will be watched for further details on reform of the state firm.

Bonds ended slightly weaker, with the yield on benchmark 2030 paper up 1.5 basis points at 8.895%. The Top-40 share index inched up 0.11% to 52,055, while the broader all-share edged up 0.16% to 57,835.

The biggest blue chip loser was consumer goods firm Tiger Brands, down 4.8% to 178.95 rand after it on Wednesday warned that headline earnings could fall as much as 36%.

Gold and platinum miners were boosted by higher precious metals prices globally as investors bought back into safe-haven assets as the number of coronavirus infections rose, rekindling fears of the negative impact on economic growth worldwide.

Impala Platinum and Sibanye Gold were both up more than 5%.

Shares in Harmony Gold were largely flat after jumping in the previous session on confirmation the miner would buy the last of AngloGold Ashanti’s remaining South African assets.