Stocks drop on rand, potential US interest rates hike

STOCKS sank to a one-month low yesterday on the back of a wilting local currency and as investors focus on the likelihood of higher interest rates in the US.

The Top40 index was down 0.7 percent to 45 825.87 points and the all share index shed 0.64 percent to 51 753.07, the lowest since early February.

The rand was trading at near 13-year lows against the dollar on the increasing view the Federal Reserve may raise rates as early as June.

Foreign investors converting proceeds after selling South African assets into hard currency for repatriation are being hard hit by the weakening rand, part of emerging market currencies suffering from a sell-off.

Resource producers were hardest hit as spot prices remained depressed.

Anglo American Platinum was the worst performer after falling 6.17 percent to R309.36 as spot prices of the precious metal slumped to their lowest level since July 2009. Its parent company Anglo American lost 3.89 percent to close at R196.50.

The benchmark stock index began the day on a positive note with gains being led by Richemont, Naspers and Remgro. Richemont closed 0.94 percent higher at R101.21 and Naspers jumped 1.84 percent to R1 710.78. But Remgro retreated from a session high of R269.89, falling 3.53 percent to close at R263.

Other decliners included Lonmin, which extended its losses, shedding 4.67 percent to close at R20.40.

Telkom shares have dropped 18 percent, wiping out gains for the year, as sales talk dwindled after the government said it would not sell a stake in the phone operator and MTN Group said it probably would not make an offer. Telkom stocks closed 2.86 percent higher at R71.85.

Trade was brisk with 331 million shares changing hands, well above last year’s daily average of 183 million shares.