SA’s stocks propel to yearly highs, rand past 8-month peak

South Africa’s stock exchange propelled to its highest level since August and was hovering close to its yearly high at 1200 GMT on drugmaker Pfizer’s announcement that its trial vaccine has been highly effective in preventing Covid-19.

Pfizer Inc said on Monday its trial vaccine was more than 90% effective in preventing Covid-19 based on initial data, making the company and its German partner BioNTech SE the first drugmakers to post initial success towards warding off the deadly virus.

The markets went into a frenzy with both the stock exchange and local currency posting big gains immediately after the announcement.

The party, however, was halted by gold mining stocks as risk appetite of investors’ increased and they offloaded and swapped safe haven gold.

The benchmark all share index was up 1.63% to close at 57,307 points while the top 40 companies index closed up 1.56% to 52,684 points.

The rally was led by South African banks with the index up almost 9%. Gold stocks took a major hit with gold price correcting by 4.5% and pushing the gold index down by 15%.

“There are hopes for a pre-Covid world and market,” said Franco Lorenzani, an independent senior analyst, explaining why investors shed gold holdings on Monday.

He added that mid to long term prospects for gold is still bullish as there will not be any major change in interest rates till 2022/23 as indicated by the Federal Reserve.

The South African rand, already strengthened by Joe Biden’s election victory, went past its 8-month peak on hopes of an early vaccine.

At 1630 GMT, the rand traded at R15.40 against the US dollar, 1.25% firmer than its previous close on Friday.

The unit was trading at its strongest since March 5, which was before the Covid-19 pandemic knocked the local economy deeper into recession.

Government bonds yields were unchanged with the benchmark instrument due in 2030 8.730%.