Rand inches up, Aspen leads stocks higher

The rand clung on to small gains on Wednesday, supported by stimulus measures from major central banks, following a sell-off sparked by fears of a second global wave of coronavirus infections.

At 1530 GMT, the rand was 0.23% firmer at R17.20 per dollar, moving away from a session-high of R17.08.

“The rand has been oscillating between R16.80 and R17.30 for the past couple of days, with market uncertainty quite clear. The rebound off the R16.30 low has left rand bulls a little gun shy, given the extent of the bounce,” Standard Bank’s Warrick Butler said in a note.

“Investors want to sell USD to invest but are being held in check by the negative headlines and obvious risks. I don’t expect this to change over the next couple of days.”

New coronavirus infections have hit record highs in six US states, while Beijing has cut flights and closed schools to contain a fresh outbreak in the Chinese capital.

This week the US Federal Reserve said it would start buying corporate debt as part of an already announced stimulus scheme, with the extra money making it easier for investors to borrow the greenback to invest in high-yielding emerging market assets.

In fixed income, the yield on the long-dated government bond due in 2030 was up 1.5 basis points at 9.465%.

Stocks posted their best daily gain in almost a month on Wednesday, catching up with global markets following upbeat trial results for a COVID-19 treatment. Markets in South Africa were closed on Tuesday for a holiday.

Trial results announced on Tuesday showed dexamethasone, used to reduce inflammation in other diseases such as arthritis, reduced death rates by around a third among the most severely ill COVID-19 patients admitted to hospital.

South African pharmaceutical firm Aspen Pharmacare confirmed on Wednesday that it owns rights to dexamethasone and distributes it in a number of countries, including at home.

This pushed its shares up 9.29% to R148.90.

BP Bernstein portfolio manager Gerhard Parkin said the news was positive for Aspen as it meant governments would buy the drug from the firm, with funds expected to be used to lower the debt that has worried investors and hit its share price.

“The market is focused on news that there is drugs available,” he added. “So the market is just hoping that we’re getting back to normal quicker than we thought.”

A jump in Aspen gave the Johannesburg All-Share index its best day since May 19, closing 3.36% firmer, while the Top 40 companies index surged 3.63%.