US, Mexico trade talks help to steady rand

THE RAND held steady against a weaker dollar yesterday as investor optimism that a US-Mexico deal will help to avert a global trade war boosted the appetite for riskier assets.

Woolworths led the JSE higher, as several retailers rose on the back of demand in the sector.

At 5pm, the rand was at R14.1222 to the dollar, after rallying briefly to R13.9525 earlier after Parliament withdrew an expropriation bill passed in 2016 that allowed the state to make compulsory purchases of land.

The thrust of the bill, which had not been signed into law, has been overtaken by a proposal by the ANC to change the Constitution to allow the expropriation of land without compensation.

Halen Bothma, an analyst at ETM Analytics, said trading was largely range-bound up until the news on land expropriation.

“The market is very sensitive to news around the land expropriation topic, which is understandable because of its importance to the economy,” Bothma said.

“(The rand) reacted strongly, but it has erased those moves, as people have realised it doesn’t change anything.”

Having tumbled to two-year lows just shy of R16 earlier this month, as the massive selloff in Turkish lira spread to other emerging markets, the rand has seen increased intraday volatility in response to news.

The rand was steady as traders eyed talks between the US and Mexico, which agreed on Monday to overhaul the North American Free Trade Agreement, putting pressure on Canada to agree to new terms on motor vehicle trade and dispute settlement rules to remain part of the three-nation pact.

On the JSE, the Top-40 index was up 0.61% to 53 883 points while the broader all-share index rose 0.64% to 60 039 points.

Retailers Foschini, Truworths and Woolworths all rose.

Woolworths led the blue-chip Top-40, closing 4.1% higher.

“We are getting the feeling that foreign investors are coming into our market thinking that retail is where the value is,” said Greg Davies, a stock trader at Cratos Capital. “Local fund managers have probably sold those stocks too low and they have decided to start the bargain hunting here.”

Building materials retailer Cashbuild bucked the trend, falling 3.21% after reporting a 9% decline in annual profit as costs rose and demand dipped. – Reuters