JSE opens higher on weaker rand as Turkish contagion spreads

The rand crashed 10% to a two-year low of R15.4163 to the dollar at the opening, as Asian markets sold off the currency after the lira weakened to a record low of 7.1171 to the dollar. At these levels, the country’s whole banking system is at risk, as it raises the likelihood of a default on international loans.

The rand later recovered to R14.1805 to the dollar, but was again under pressure soon after the JSE’s opening, trading at R14.60, more than 2% lower from the close of R14.2507.

Comments from Erdogan and finance minister Berat Albayrak at the weekend that a plan would be revealed on Monday to calm the markets failed to restore confidence.

With Turkish inflation expected to run above 20%, a widening current account deficit, bond yields at record highs and growing political tensions with the US, the Turkish administration has limited choices to stop the lira from bleeding, said FXTM analyst Hussein Sayed.

“Investors need to see serious economic measures and not political ones to prevent things getting completely out of control,” Sayed said.

The Dow closed 0.77% lower on Friday. The Nikkei 225 was off 1.98% and the Hang Seng lost 1.5% on Monday morning.

At 9.46am the all share was 0.5% up at 57,991.60 points and the top 40 rose 0.59%. Resources rose 1.26%, the gold index 1.03% and industrials 0.64%. Banks shed 1.67%, general retailers 1.2% and financials 0.53%.

BHP lifted 2.14% to R310.03.

Sibanye-Stillwater rose 3.23% to R8.94 and Harmony 1.79% to R23.26.

FirstRand was down 3.05% to R63.36 and Standard Bank 1.08% to R186.

Shoprite rose 0.74% to R213.90 but Woolworths slipped 0.8% to R49.66.

Fortress B rose 1.41% to R15.85.

Naspers added 0.85% to R3,400.01.

Sappi plummeted 7.2% to R93.64 after a third-quarter update failed to impress the market. Sappi reported sales rose 51% in Europe to end-June, but net debt rose to $1,6bn from $1,318bn in the year-earlier period. Profit slipped to $51m from $58m.