Rand, bonds recover slightly from virus-related selloff

The rand clawed back losses on Tuesday, firming slightly alongside local bonds as a selloff triggered by the spread of the coronavirus was halted by technical factors curbing big movements in either direction.

At 1530 GMT the rand was 0.14% firmer at R14.58 per dollar, back from a slide to R14.71, its weakest in two months, with emerging markets engulfed by risk aversion as the outbreak of virus in China reactivated fears for global growth.

The rand’s run beyond the R14.60 technical level did not last as buyers returned, although some traders warned the recovery could be temporary as investors continue to assess opportunities and the impact of the coronavirus.

Global stock markets and oil prices tumbled in recent days on fears the virus could further damage China’s already weakened economy, a key trade partner particularly to commodity producers like South Africa.

News that a state-owned bank would give cash-strapped South African Airways (SAA) R3.5 billion ($244 million) of emergency funding to keep operating while it wraps up its business rescue process also soothed investor concerns.

Bonds also recovered, with the yield on the benchmark 2026 issue down 6 basis points to 8.085%.

Stocks closed down slightly, with the Johannesburg Stock Exchange’s Top 40 index 0.3% lower at 49 800 points and the broader all-share index down 0.28% to 55,748 points.

Blue Label Telecoms was the biggest loser of the day, falling 13.5% after it said South Africa’s third largest mobile carrier Cell C, in which it is the largest shareholder, had defaulted on a host of debt payments.