RAND SOFTER, BOURSE FLAT

THE RAND weakened yesterday, reflecting nervousness before the Budget speech today and global worries about the spread of coronavirus.

At 5pm, the rand bid at R15.2050 to the dollar, 7 cents softer than at the same time on Monday, extending losses and mirroring falls in other emerging market currencies as the virus outbreak gathered pace beyond China.

At home, traders were nervous that a bleak fiscal picture in the Budget speech by Finance Minister Tito Mboweni could trigger a downgrade to “junk” of South Africa’s credit rating by Moody’s, the last agency to rate the country investment grade.

“South Africa’s idiosyncratic risks have weighed heavily on investor sentiment,” ETM Analytics economists wrote, saying the risks included growth-sapping power cuts, an unsustainable debt trajectory and a lack of political will to implement reforms.

A Reuters poll last week predicted Mboweni would present an updated budget deficit forecast of 6.2 percent of gross domestic product for the current fiscal year, up from 5.9 percent in October.

Bonds were little changed, with the yield on the benchmark 2026 government issue up 0.5 basis points to 7.865 percent

Local stocks failed to recover ground yesterday, a day after touching a two-month low.

The JSE Top40 index ended the day less than 0.1 percent higher at 49 303.27 points, while the all share index was down 0.13 percent to 54 809.51 points.

Meanwhile, emerging markets generally rose after steep declines in the previous session when a surge in the number of coronavirus cases outside China spurred pandemic fears and heightened worries about greater economic damage from the outbreak.

MSCI’s index of emerging market shares rose 0.4 percent to break a three-session losing run. It had lost 2.7 percent on Monday to mark its steepest one-day decline in nearly seven months, after South Korea, Italy and Iran reported a sharp rise in the number of infected cases. I Reuters