Food and drug retailers rally on Zuma talks

The share prices of food and drug retailers have rallied on the bourse as expectations of President Jacob Zuma’s resignation mount.

The markets responded positively to talks between ANC president Cyril Ramaphosa and Zuma regarding Zuma’s exit. The rand firmed through R12/$.

The food and drug retailers index was up 1.95% on Wednesday, following a weak performance that has seen it drop 4.23% in 2018. The index ended 2017 24.88% higher and was up 5.24% at the end of 2016.

Dis-Chem recorded the biggest jump among its rivals, climbing 5.17% to close at R36.20, followed by Pick n Pay, which closed 5.12% higher at R67.58, while Clicks rose 3.97% to close at R164.72.

Shoprite gained 2.4% to R239.61. Spar was at the tail end of the rewards, gaining a mere 0.92%.

“It’s a sector theme, not a stock specific theme,” said Vele Asset managers equity analyst Matthew Zunckel.

He said all the retailers were rallying on the back of renewed expectations of the resignation of Zuma and the anticipated event was expected to boost consumer confidence significantly, “which lends itself to higher retail spending”.

Mergence Investment Managers portfolio manager Peter Takaendesa said the buying interest was across banks, retailers, property and domestic industrial companies.

“This means the market is expecting further reforms and business-friendly policies from the government going forward,” he said. It was mostly more money flowing into SA that had exposed companies or stocks as the rand had remained steady below R12 to the dollar despite recent global market volatility.