Rand firms on improved risk appetite, Naspers lift stocks

The rand firmed on Monday, helped by increasing demand for emerging market currencies amid a slew of disappointing economic data in developed markets and growth warnings from central banks.

Stocks also rose, boosted by e-commerce and technology giant Naspers, though a fall in the shares of financials after weak results capped gains on the Johannesburg All-Share index.

At 1525 GMT the rand was 0.55% firmer at R14.35 per dollar, moving higher in tandem with developing-world peers.

Employment growth in the United States for February came in much weaker than expected last week, triggering a revival in demand for risk assets as US Treasury yields dived.

“Global data continues to suggest that the bar for higher rates in the US remains high. This is on the back of the mixed labour data as well as comments from (Federal Reserve Chairman Jerome Powell),” RMB analyst Gordon Kerr said in note.

“We remain constructive on the outlook for both (South African) bonds and currency as we move towards the Moody’s rate decision at the end of the month,” he added.

Powell said on Sunday the US central bank does “not feel any hurry” to change the level of interest rates again as it watches how a slowing global economy affects local conditions in the United States.

Expectations of lower US interest rate expectations often boost investors’ appetite for emerging market assets, which offer higher returns but carry more risk.

The rand has moved away from two-month lows of R14.58 hit last week, although the currency remains vulnerable to domestic risks mainly linked to power utility Eskom and the threat it poses to the country’s sovereign credit risk.

In fixed income, yield on the benchmark paper due in 2026 closed flat at 8.665%.

Financial stocks dip

In stocks, the financial index fell 1.59% as South Africa’s No.2 insurer Old Mutual dropped 5.46% to R20.59 after a 12% drop in adjusted full-year earnings and Absa Group fell 3.10% to R167 after the bank’s annual headline earnings per share dipped.

Tongaat Hulett fell 19.32% after its chief executive said last week that a review of past accounting practices at the firm could affect previously reported financial information.

Helping the market gain ground was market heavyweight Naspers, which ended the session 2.44% stronger at R3 146.53, thanks largely to its one-third stake in Chinese internet group Tencent.

BP Bernstein trader Vasili Girasis said Naspers had gained on the back of news that China’s content regulator has approved the monetisation of 95 new video games, including titles from Tencent Holdings.

Aspen Pharmacare started the week 1.82% stronger following an aggressive sell-off on Friday, which saw the multi-national drugmaker lose almost a third of its value on concerns about ballooning debt.

The Johannesburg All-Share index rose 0.17% to 55,580 points while the Top 40 index climbed 0.31% to 49,387 points.