Rand falls after Eskom reports losses

The rand fell around 1% against the dollar on Monday as struggling state-run power firm Eskom reported a R2.3 billion loss for the 2017/18 financial year. At 1522 GMT the rand was at 13.53 to the dollar, down 1.05%.

The power utility, which supplies more than 90% of the country’s power and has around R270 billion of state-guaranteed debt, attributed the losses to increases in financing costs and depreciation of assets. “The Eskom results painted a very dire picture. The numbers show an ailing power utility, financial instability and a complete lack of direction in terms of whether this going forward is sustainable,” said Cheslyn Francis, derivatives trader at Afrifocus securities.

“I think that is what the market is focusing on because electricity generation is an important part of any industrialised nation. Everybody will be watching the plans going forward for how they are going to navigate this.”

In fixed income, the yield on benchmark paper due in 2026 was up 0.5 basis points at 8.775%.

Stocks broke a two-session winning streak as escalating trade anxieties driven by US President Donald Trump’s latest tariff threats against China offset a number of robust earnings.

The Johannesburg All Share Index weakened 0.76% to 56 556 points, while the Top 40 Index fell 0.83% to 50 481 points.

“There is still an air of uncertainty in the atmosphere over trade tensions, especially following Trump’s comments late last week that he could impose further tariffs on China and the social media tweet early this morning directed at Iran,” said FXTM Global head of currency and market research Jameel Ahmad in a note.

“It is likely to equal further pressure on global markets.”

Consumer discretionary stocks were the biggest drag on the All Share Index, with market-heavy weight Naspers down 1.68% after its subsidiary said it had agreed to acquire Israeli payment technology provider Zooz.

Retailer Steinhoff extended Friday’s losses on profit taking, closing down 14.24% to R2.77.