JSE, rand not impressed by Mboweni

The JSE closed weaker yesterday, along with the rand, as investors digested finance minister Tito Mboweni’s supplementary budget speech.

Before the speech, the rand had already lost about 0.7% to R17.32/$. As Mboweni finished speaking, the rand had weakened further, down 0.9% to R17.35/$, before falling still further into the evening.

Analysts believe that the speech lacked details on how the plans will be carried out, creating uncertainty for investors.

The rand has now lost more than 19% to the dollar in 2020.

The JSE all share lost 1.85% to 54,447.73 points and the top 40 1.95%. Platinum miners dropped 5.63%, resources 2.41%, financials 1.08%, banks 0.81 and gold miners 0.6%.

The bourse tracked lower international markets as concern grows that the second wave of Covid-19 will interrupt a global economic recovery.

“The rand is the worst performing emerging-market currency after the Brazilian real. The reason for that is because there is no clear fundamental picture that businesses and investors can believe in and grab on to for the future,” said Efficient group senior economist

Francois Stofberg.

“If we had had a lot of good news about reforms, wage bill settlements etc, then the rand might have strengthened,” said Old Mutual Investment Group portfolio manager John Orford. On the other hand, there had not been much new bad news, which would have sent the rand “a lot weaker”.

What came was largely expected, he said.