Rand slips as market anxiety deepens
SA’s rand has tumbled to its weakest in three weeks, spooking investors already concerned about the management of the economy.
|||Johannesburg - South Africa's rand tumbled to its weakest in three weeks on Wednesday after reports that a large asset manager was halting loans to state-owned firms, spooking investors already concerned about the management of the economy.
By 16h10 GMT the rand had slipped 1.56 percent to 14.7210 against dollar, which was at one-month highs after positive employment figures raised bets of a rate hike by the US Federal Reserve.
“A lot of investors will prefer to sit on the sidelines, waiting until there is more clarity regarding the finance minister and state firms' debacle,” analyst at ETM Analytics Ricardo Da Camara said.
South African fixed-income asset manager Futuregrowth has stopped lending to some state-owned local companies, citing concerns about “a power struggle going on between factions in government”.
A narrower trade surplus in July piled further pressure on local markets that have been on the ropes over the possibility that police could charge Finance Minister Pravin Gordhan for his role in a spy unit in the revenue service.
Government bonds were also weaker, with the yield on the benchmark 2026 paper adding 5 basis points to 9.03 percent.
On the bourse, stocks were down, led by retailer Mr Price whose shares slid over 18 percent after the company said it expected its interim earnings not to match last year's after its worst winter season in over a decade.
The benchmark Top-40 index was down 1.09 percent to 46,307 points while the broader All Share index was 1.29 percent down at 52,760 points.
Other retailers followed suit, with Foschini Group tanking 7.79 percent to R130.71 and Truworths International falling 3.86 percent to R76.15.
“It just seems that sentiment at the moment is turning a bit negative in markets,” said Afrifocus securities portfolio manager Ferdi Heyneke.
“The situation with Treasury and the uncertainty is creating in foreign investors' minds, there is no real clarity about what is going to happen.”
Trading volumes were above average, with 310 million shares changing hands compared with last year's daily average of 280 million.
REUTERS