Mixed market reviews as rand rallies

SOUTH African markets displayed a fairly mixed performance during a week dominated by the stronger rand.

Early in the week the local currency cracked through the R13.20/$ mark for the first time since October last year, before pulling back to R13.50/$ on Friday.

The stronger currency played out favourably for retailers and banks, but choked some of the big industrial companies that derive a chunk of their earnings from foreign sources.

The underperfomance of the industrial shares, which carry a bigger weighting in the All Share index, kept the overall market gains in check.

Sasfin Asset Managers analyst Liston Meintjes said the shortterm trend for the JSE depended on the rand, which would be driven by a range of factors that included commodity prices.

“Can the rand hold current levels through to December? Get better? Go back to some of the levels of earlier this year? That will depend on a number of factors, which include local politics,” Meintjes said.

The All Share index settled just under 1% higher at 52 806.50 points.

Banks ended higher for the sixth straight week, with the firmer currency boding well for inflation. Rand strength reduces the likelihood of an interest-rate hike in the short term.

Retailers also benefited from the scenario of a possible lowinterest-rate environment.

Analysts have partly attributed the strength in the rand to a global search for better yields after the world’s major central banks cut interest rates to boost economic activity.

The Reserve Bank of New Zealand cut rates by 25 basis points this week, following in the footsteps of the Bank of England and Bank of Australia last week.

“From a very short-term basis a break above R13.43/$ should yield a quick move to at least R13.55/$,” Standard Bank analysts wrote in a note.

The yield on the benchmark R186 bond also dipped to the lowest level since the fourth quarter of 2015, to 8.435%.