JOHANNESBURG – South Africa’s rand gave back earlier gains against the dollar on Friday, tracking global markets hit by a return of investor risk aversion, while stocks fell for the third day, knocked by weaker resources shares.
The JSE Top-40 index of blue-chip stocks closed 0,71 per cent weaker at 18 785,54 points while the broader All-share index shed 0,58 per cent to 20 814,69 points.
The rand touched a session high of 8,8450 against the dollar before losing ground to trade at 8,98, down 1,07 per cent on Thursday’s 8,8850 close.
The rand took its cue from US stocks, which fell as investors worried that the recent run of upbeat company profits, which has buoyed global financial markets in recent days, might not be sustainable.
Last week’s rally had also left the rand somewhat over-valued, as the market looks ahead to this week’s general election in South Africa, said RBC Capital Markets in a note.
‘Rand is back in vogue as risk appetite improves (but) the rally is looking a little over-extended, with (this) week’s election adding to potential risks. Longer-term we remain bearish,’ it said.
On the local bourse, the platinum index fell 2,91 per cent, weighed down by Impala Platinum which dropped 5,05 per cent to 164 rand.
‘It’s a thin trade today and a bit of profit-taking coming in again,’ a Johannesburg-based trader said.
Harmony Gold lost 4,43 per cent to 75,50 rand and Gold Fields was down 2,82 per cent to R92,42 as the price of bullion fell.
Mining and bourse heavyweights Anglo American lost 3,21 per cent to R182,65, but rival BHP Billiton gained 0,54 per cent to R185,49.
Generic drug maker Aspen Pharmacare, was the biggest loser on the bourse, shedding 9,3 per cent to R45,35.
‘It could be maybe in the pharmaceutical sector investors are switching between shares,’ said Barend Saayman, a trader at Thebe Securities.
South Africa’s No.3 drug maker Cipla Medpro SA lost 1,48 per cent to four rand after it opposed a R2,1 billion (US$236,4 million) buy-out bid by rival Adcock Ingram , which rose 1,08 per cent to R37,50.
South African government bonds however rallied, pushing yields lower. The 2015 bond yield fell 11,5 basis points to 7,895 per cent, while that for the R209 bond maturing in 2036 shed 15,5 basis points to 8,005 per cent.
‘I think it’s more a function of offshore interest again in local equities and bonds, although that said our local equity market has stumbled today,’ said a Johannesburg bonds trader. ‘I think the (bond) market is generally bullish again.’
-Nampa-Reuters
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