Rand and stocks enjoy gainful sessions

THE RAND inched firmer yesterday, regaining the momentum injected by Deputy President Cyril Ramaphosa’s election to lead the ANC.

However, at 5pm, the rand bid at R12.7184 to the dollar, 8.89c softer than at the same time on Wednesday, slightly down from a session best of R12.6800 in midmorning trade, with technical indicators suggesting there was still room for further gains as far as R12.26.

The unit looks certain to close below the R12.9945 200-day weekly moving average, offering attractive buying levels for investors still searching for long plays on the rand. The currency’s rally was ignited by Ramaphosa’s victory in the race to be leader of the ANC following a campaign pinned on tackling corruption and pushing business friendly policies.

The rand has gained nearly 7 percent against the dollar since last Friday.

Moody‘s, the last of the top three agencies that still rates Pretoria’s local currency debt at investment grade, cited Ramaphosa’s victory as a positive for economic policy.

Some investors, however, warned that the euphoria may be overdone and that the currency will remain volatile in the closing weeks of the year.

“Although the rand has continued to hold the gains posted recently, it will require real impetus to extend the potential gains beyond the recent lows in the (R)12.50’s in the short term,” said Nedbank’s Reezwana Sumad.

Bonds were weaker, with the yield on the benchmark paper due in 2026 at 8.695 percent.

“The Johannesburg Stock Exchange all share index traded higher this week in line with stronger emerging market equities and improved investor sentiment following Ramaphosa’s victory,” said analysts at NKC African Economic in a note.

The JSE Top40 index climbed 1.59 percent at 52 082.44 points while the all share index gained 1.27 percent to 58 771.79 points.

Mediclinic jumped 6.55 percent to R104.70, Naspers climbed 4.53 percent to R3 450.67, while British American Tobacco gained 2.39 percent to R855.23.

Meanwhile, Wall Street’s main indices rose as investors expected lower corporate tax rates to encourage companies to spend their additional capital on dividends, new projects and wage hikes.

FTSE/JSE Africa Index Series