Geopo­lit­i­cal fac­tors a thorn in the flesh

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

DO­MES­TIC and global geopo­lit­i­cal fac­tors mostly con­trib­uted to­wards the selling of risky as­sets (shares) across the globe.

The wor­ry­ing con­flict be­tween the US and North Korea on a pos­si­ble long range mis­sile at­tack and Gaum, a US ter­ri­tory hous­ing a strate­gic air and naval base, has led to in­vestors seek­ing more de­fen­sive as­sets, like gold and bonds.

On Wall Street, the Dow Jones in­dus­trial in­dex traded 1 per­cent lower for the week in early trade on Fri­day.

In Europe, the Ger­man Dax ended the week 2.3 per­cent lower, while the FTSE100 in Lon­don lost 2.7 per­cent on the pre­vi­ous Fri­day’s close.

Lo­cally, although the un­suc­cess­ful mo­tion of no-con­fi­dence in Pres­i­dent Zuma al­most had no ef­fect on the fi­nan­cial num­bers, mar­ket jit­ters around Moody’s pos­si­ble down­grad­ing of of South Africa’s sov­er­eign debt late on Fri­day, con­trib­uted to a sell-off of shares on the JSE.

On the eco­nomic front, the re­lease of neg­a­tive man­u­fac­tur­ing (– 2.3 per­cent) and min­ing pro­duc­tion (– 0.8 per­cent) data for June, also weighed heav­ily on neg­a­tive sen­ti­ment on the JSE.

The all share in­dex lost 789 points (1.4 per­cent) for the week, af­ter the in­dex closed on a record level of 56 396 last Mon­day. How­ever, the in­dex is still 6.9 per­cent higher since the end of June and 8.9 per­cent up since the be­gin­ning of the year.

Over the week, the in­dus­trial in­dex de­creased 1.7 per­cent, but re­mained 11.1 per­cent higher for the year to date. Fi­nan­cials tracked the weaker rand and traded down by 1.1 per­cent since the pre­vi­ous Fri­day’s level.

Re­sources also took a dip last week and closed 1.2 per­cent lower on Fri­day. The listed prop­erty in­dex also moved south and ended the week 1.1 per­cent down.

The rand stayed un­der pres­sure given the do­mes­tic geo-po­lit­i­cal and the Moody’s is­sue of a pos­si­ble fur­ther down­grad­ing.

On Fri­day af­ter­noon just af­ter the close of the JSE, the rand traded at R13.47 to the dol­lar. This wass al­most the same level as the pre­vi­ous week.

Against the pound, the rand traded some­what stronger over the week, gain­ing 5 cents, or 0.3 per­cent.

Against the euro, the rand lost a fur­ther 11c, or 0.7 per­cent and traded late on Fri­day af­ter­noon on R15.91.

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