Not a bad week for rand and share prices

WHILE many South Africans were engrossed in the land reform issues, financial markets seemed to have largely been unaffected by the debate.

The continuing trade war between the US and China had more impact on the markets. Currencies and share prices of most emerging markets suffered in reaction.

The assurance by President Cyril Ramaphosa that land reform would be orderly had a calming effect on foreign investment sentiment. This despite a tweet by the US President Donald Trump that his administration would take a close look at the land redistribution exercise, and also claiming that land seizures and killing of whites were taking place in South Africa.

The evidence heard by a commission of inquiry into State capture had re-assured the rest of the world that South Africa was serious on acting on corruption.

While share prices across the emerging market recorded losses on Friday, the JSE board experienced a strong rally. The all share index gained more than 1 percent on Friday alone.

The MSCI emerging market fell by 0.3 percent.

Investors became nervous in anticipation that the US Federal Reserve chairperson Jerome Powell would indicate in his speech on Friday evening that the US would increase interest rates in September.

Share prices recovered sharply last week. The all share gained 2 151 points, or 3.8 percent, for the week to close at 58 798 points.

Industrials increased by 5.8 percent, financials rose 4 percent, while resources traded higher by 0.7 percent. The listed property index increased by 1.3 percent, although still down 23.2 percent since the beginning of the year.

The rand appreciated against the main currencies last week, despite the “negative” geopolitical issues. Against the dollar the currency improved by 28 cents (+1.8 percent) to R14.28 from R14.56 to the dollar the previous Friday. The rand traded flat against the euro on R16.61 and had firmed by 15c against the pound to R18.36.

The worrying aspect was the increase of Brent oil last week, going up by more than $3 (about R42) a barrel to above $76 a barrel on Friday.