S. Africa’s rand up 2% as ANC to replace Zuma

But stocks weaken

JOHANNESBURG (Reuters) – South Africa’s rand firmed 2% on Friday as the ruling African National Congress prepared to elect its now leader, the likely next president.

Investors also cut long dollar positions amid tight liquidity.

Stocks weakened, with Steinhoff topping the decliners after its chairman resigned late on Thursday.

The rand was 2.19% firmer at 13.1925 per dollar.

The Bank of Israel on Friday set its representative rate for the rand at NIS 0.2620.

Courts ruled that senior officials in two provinces seen as supporting ANC presidential candidate Nkosazana Dlamini-Zuma had been illegally elected and could not attend the conference.

The party is expected to name a winner on Sunday.

“Markets are definitely viewing that court ruling as positive for the rand, more especially positive for the Ramaphosa campaign,” said senior forex dealer at Standard Bank Oliver Alwar.

The race is mainly between Deputy President Cyril Ramaphosa, generally favored by financial markets, and Dlamini-Zuma. It is seen as too close to call.

“I think markets are discounting far too much of a Cyril victory. Its not cut in stone. Things could change very easily over the weekend,” Alwar said.

Ramaphosa, a billionaire businessman, is seen as the most business-friendly candidate, compared with Dlamini-Zuma supported by President Jacob Zuma, her former husband, and the five other contenders.

In fixed income, the yield for the benchmark government bond due in 2026 rose 2 basis points to 9.095%.

The woes of Steinhoff continued to weigh on the bourse after South African tycoon Christo Wiese resigned on Thursday as chairman of the retail group, the latest setback for the firm in the throes of an accounting scandal.

“Everybody is waiting for them to publish their results to see how deep the rot is. We’re not getting any kind of feed back, any kind of news feed from the company itself which is what is frustrating everybody,” said BP Bernstein trader Vasili Girasis.

Shares in Johannesburg-listed Steinhoff closed 9.98% down at 8.03 rand.

PSG Group, in which Steinhoff owns about 25%, weakened 2.64% to 243.41 rand after Steinhoff said it has sold a 9.5% stake in PSG for 4.7 billion rand ($354.29 million).

The benchmark JSE Top-40 index shed 1.06% to 50,953 points, and the broader Allshare index weakened 0.75% to 57,412 points.