MARKET WRAP: Rand slips for fifth consecutive day
The rand weakened for the fifth consecutive session on Tuesday, its first five-session loss since early August as emerging-market currencies remained under pressure amid global risk-off sentiment, while investors begin to shift their focus to the ANC’s briefing on its plans to revive the SA economy.
Investors are awaiting some direction from the government regarding SA’s economic-growth trajectory, with the party set to announce its plans to boost an economy that the Reserve Bank expects to grow by just 0.6% in 2019.
The ANC briefing, set for Wednesday, comes after the party’s national executive committee (NEC) meeting at the weekend, at which finance minster Tito Mboweni’s economic reform paper was discussed. Pressure is mounting for President Cyril Ramaphosa to implement his promised structural reforms to boost economic growth and to turn around ailing state-owned entities, such as Eskom.
“The SA economy needs the structural reform that was promised during Ramaphosa’s election [campaign]. The verdict in itself will be telling. If the ANC wholeheartedly backs Mboweni’s plan, it highlights their commitment to re-invigorating growth at the expense of some political capital,” said Monex Europe analyst Simon Harvey.
The risk for the rand is further division within the ANC, Harvey said, and the likely repercussions such a situation will have on the sustainability of the “current pile of sovereign debt”.
Worse-than-expected Absa purchasing mangers’ index (PMI) data added to the local currency’s woes on Tuesday, with the rand dropping to its lowest level in two months. The PMI decreased to 41.6 points in September, from 45.7 previously, well below the Bloomberg consensus of 46.5.
At 5.43pm, the rand had weakened 1.35% to R15.3518/$, making it the worst performing among emerging-market currencies over the past five sessions. It had fallen 1.67% to R16.7838/€ and 1% to R18.8133/£. The euro was 0.31% firmer at $1.0934.
Gold added 0.81% to $1,484.27/oz, while platinum lost 0.29% to $879.76. Brent crude was down 0.13% to $59.3 a barrel.
Shortly after the JSE closed, the Dow was 0.78% lower at 26,707.67 points. In Europe, the FTSE 100 lost 0.64%, France’s CAC 40 1.36% and Germany’s DAX 30 1.19%.
Earlier, in Asia, Japan’s Nikkei 225 rose 0.59% while the Shanghai Composite and Hong Kong’s Hang Seng were closed for a public holiday.
The JSE all share rose 0.22% to 54,945.9 points and the top 40 0.26%. Gold miners climbed 3.79%, the platinum index 2.03% and resources 1.11%.
Murray & Roberts dropped 6.37% to R12.35 after German group Aton said on Monday that it has let its R7.6bn offer for the company lapse due to opposition to the deal by the construction company’s independent board, and competition authority concerns.
Net1 UEPS said on Tuesday that it had delayed submitting its company filings in the US after the Supreme Court of Appeal ordered it to pay back R317m to the SA Social Security Agency (Sassa). Its share price was unchanged at R51.
Source: businesslive.co.za
