Adcock leads shares higher, rand stronger
SOUTH African shares enjoyed a second day running of gains on Friday with drugs maker Adcock in focus after Chile’s CFR Pharmaceuticals formally bid $1.2-billion (about R12.2-billion) to acquire it. Adcock ended 2.45% higher at R71 a share.
Johannesburg stocks gained in line with world shares, which climbed back towards five-year highs as markets cheered a robust defence of the Federal Reserve’s money printing by Janet Yellen, who is expected to take charge of the US central bank next year.
But rising inflation pressures due to rand weakness this year mean the Reserve Bank is not expected to offer support by reducing rates at its monetary policy committee meeting next week.
“The main story is Yellen’s speech in the US. It has very little to do with local fundamentals,” said Abri du Plessis, chief investment officer at Gryphon Asset Management in Cape Town.
The JSE Top 40 index rose 0.57% to 40 394. The All Share index climbed 0.6% to 45 174.
The rand recovered to two-week highs against the dollar, lifted by an official revision of trade data that has left South Africa with a much narrower deficit than previously stated.
The revision points to a narrower current account shortfall, but the market relief could be fleeting as the country relies heavily on capital flows, which are prone to volatility, to plug the gap.
The rand traded at R10.16/$ on Friday night.
Government bonds were on a firmer footing, with the yield for the paper in 2026, the secondary-market benchmark, sliding 12 basis points on the day to 8.095%. The yield for the bond due in 2015 at the shorter end of the curve fell by the same margin to 6.03%.
Global equity markets rose after Yellen, President Barack Obama’s choice to lead the Federal Reserve, signalled the US central bank’s stimulative monetary policy would remain in place for some time, while the dollar rose to a twomonth high against the yen.
The Dow Jones industrial average was up 52.08 points, or 0.33%, at 15 928.30. The Standard & Poor’s 500 index was up 3.54 points, or 0.2%, at 1 794.16. The Nasdaq Composite index was up 5.58 points, or 0.14%, at 3 978.32.
An index of world equity markets marched higher after Yellen told the confirmation hearing that efforts to boost hiring were “imperative” for promoting a strong US economic recovery.
MSCI’s all-country world stock index rose 0.5%, while the panEuropean FTSEurofirst 300 index of leading regional shares gained 0.23% to close at 1 297.34.
Japanese equities, made cheap for foreign investors by a falling yen, led the charge, jumping 1.95% to bring gains for the week to a heady 7.65%, the Nikkei index’s biggest weekly rise since December 2009.