Rand stronger after Sona

The rand and stocks strengthened on Friday, buoyed by higher commodity prices and shrugging off a brawl in parliament during President Jacob Zuma’s annual state of the nation address. Investors’ nerves had been jarred by some speculation that Zuma might use his speech late on Thursday to announce economic policy shifts and punish those cabinet ministers who tried to unseat him last year. In the end, he made no such announcements, but parliament descended into chaos when security guards tussled with far-left legislators who interrupted Zuma’s speech and lawmakers from the main opposition party walked out. Rising commodity prices helped push South African equities higher on Friday to leave the JSE Top-40 index up 1.6% higher at 45.756 and the broader All-share index 1.5% higher at 52.687. ArcelorMittal South Africa rose 0.8% to R13.78 after the steel maker narrowed annual losses by more than 80%. Tsogo Sun added 0.45% to R26.85 after Africa’s biggest hotels and casino group said it was considering selling its hotel properties for about R3.3 billion. Meanwhile, by 3pm, the rand had gained 0.26% to 13.41 per dollar, its firmest level since Tuesday after closing at 13.3750 overnight in New York. It held its own in weekend trade and was trading at 13.35 to the dollar at 2.40pm yesterday. The unit has struggled to push through short-term technical resistance at around 13.40, with demand for riskier high-yielding assets ebbing as concerns about political risk in Europe and the United States leave investors looking to safe-haven assets. Piling more pressure on the South African currency are credit rating concerns. “We think that the rand will remain vulnerable in the near term … on concerns about the weak economy and credit rating downgrades,” analysts at 4Cast said in a note. Bonds were also firmer, with the yield on the benchmark paper down 3 basis points to 8.77%. –