RAND, BOURSE SCORE GAINS
THE RAND firmed a touch on Friday ahead of a decision by S&P Global Ratings which could change the outlook on the country’s sub-investment grade rating to negative.
At 5pm, the rand bid at R14.6718 to the dollar, 1 cent stronger than at the ame time on Thursday, having rallied in the previous session when the central bank, citing growth risks, kept lending rates unchanged.
South Africa is ranked sub-investment grade by S&P and Fitch, two of the three main ratings firms, and narrowly dodged a downgrade to junk by Moody’s earlier this month when the firm opted to only lower its outlook to negative.
S&P said last month at a conference there was no immediate pressure to change the country’s “BB” sovereign rating.
“We expect the agency will deliver a negative outlook on (South Africa’s) local currency rating, and quite possibly on its...foreign currency rating too,” said Annabel Bishop, chief economist at Investec.
Bishop and other analysts believe S&P will wait until February’s budget before changing the actual rating, with the rand gaining in the meantime from relatively strong demand after Thursday’s central bank decision supported the carry trade.
The yield on the benchmark government bond due in 2026 rose 5.5 basis points to 8.385 percent.
Stocks rose slightly alongside emerging market equities as the latest comments from China about finding a resolution to its tariff dispute with the US lifted hopes that the two sides would reach a trade agreement soon.
The benchmark JSE Top40 index was up 0.5 percent to 50 484.88 points while the broader all share index rose by 0.39 percent to 56 759.62 points.
“I don’t think anyone actually knows what’s going on with these discussions on trade wars,” said Nilan Morar, trader at GT247.
“We’re moving from the potential to relaxing tariffs one day to increasing tariffs, to no change.”
Resources led the bourse higher, with energy companies Exxaro and BHP Group up 2.74 percent and 2.24 percent, respectively.