Rand stretches gains, EOH tumbles 9%

THE RAND added to recent gains yesterday, remaining in favour with investors in search of higher yields as the dollar eased on dimming hopes of interest rate hikes soon.

By 5pm, the rand had gained 0.2 percent to R12.9278 compared to its close of R12.9550 overnight in New York.

The local unit burst through the 13 psychological mark on Monday on its way to a two-week best as last week’s decision by government to suspend new mining laws combined with weak US economic data soothed investor anxieties.

High-yield but riskier assets were buoyed by the dollar’s continued slide following weaker-than-expected housing data and the collapse of a health bill.

Meanwhile, stocks were lower with South Africa’s largest technology group EOH Holdings falling almost 9 percent after allegations of corruption surfaced. The firm denies wrongdoing.

The benchmark JSE Top40 index dropped 1.2 percent to 46 927.84 points, while the all share index lost 1.05 percent to 53 261.64 points.

EOH was the biggest faller on the all share index, dropping 8.81 percent to R115.80 a share, after an opinion piece in Business Report newspaper accused the company of being involved in impropriety in its contracts with South Africa’s welfare agency.

“It’s a very controversial article and paints them in a very negative light, that creates uncertainty and markets don’t like it. Shareholders have had a knee-jerk reaction and there’s been a sell-off,” Independent Securities trader, Ryan Woods said. Shoprite retreated 2.71 percent to R200 after it said trading conditions remained challenging in the second half of its financial year.