Lo­cal mar­kets make steady re­cov­ery

The Star Early Edition - - PRICES - Dr Chris Harmse Chief econ­o­mist Re­bal­ance Fund Man­agers

SOUTH African fi­nan­cial mar­kets con­tin­ued to move pos­i­tively last week, as more and more ev­i­dence sug­gest that the econ­omy is re­cov­er­ing.

Man­u­fac­tur­ing out­put in­creased by 1.9 per­cent year-onyear in Novem­ber last year. This im­proved fig­ure, to­gether with the news by Grain SA that it ex­pected a sur­plus maize pro­duc­tion this year, as well as the stronger rand and a surge in com­mod­ity prices, im­proved fi­nan­cial mar­ket as­sets last week.

On the JSE, the all share gained 1 579 points or 3.1 per­cent last week to close on 52 795 points. The in­dex is now al­ready 2 141 points or 4.2 per­cent higher since the be­gin­ning of the year.

Last week the JSE Top40 in­dex im­proved by 1 611 points or 3.6 per­cent, fi­nan­cials in­dex was up by 0.7 per­cent, while in­dus­tri­als gained 2.9 per­cent. Given bet­ter prospects for com­mod­ity prices, the re­sources in­dex im­proved by a mas­sive 6.6 per­cent.

Dur­ing the US Pres­i­dent-elect Don­ald Trump’s first news con­fer­ence last Wednes­day, no clear in­di­ca­tion of his eco­nomic poli­cies emerged and it raised more con­cerns than be­fore.

In re­ac­tion to Trump’s me­dia brief­ing, the rand gained 2 per­cent on Thurs­day, reach­ing its strong­est level in two months as the dol­lar lost ground given the un­cer­tainty to­wards eco­nomic poli­cies by the Trump ad­min­is­tra­tion.

The rand traded at the close of the JSE on Fri­day at R13.57 to the green­back. This was 10 cents or 0.7 per­cent stronger than the pre­vi­ous Fri­day.

Against the pound, the rand ap­pre­ci­ated by 40c or 2.4 per­cent to R16.38 and gained 6c (0.4 per­cent) against the euro to R14.39.

Given the stronger rand, bond rates and listed prop­erty also moved higher.

The R186 gov­ern­ment bond traded at 8.67 per­cent at the close on Fri­day as the re­turns on the bond im­proved by 1.5 per­cent over the week.

The listed prop­erty in­dex closed on 648 points. This was an in­crease of 8 points or 1.3 per­cent for the week.

De­spite the stronger rand, the in­crease in the in­ter­na­tional oil price since the last week of De­cem­ber con­trib­uted to an un­der re­cov­ery (there­fore fuel prices should in­crease) to­wards the petrol and diesel prices. Up to Thurs­day the un­der re­cov­ery for Petrol 95 was 43c a litre and 38c for diesel.

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