Exporters’ shares sold as the rand improves

SOUTH African stocks fell for a second session running on Friday as a firmer rand hit exporters.

The rand gained more than 0.4%, prompting investors to cash in shares of exporters, some of which are also listed in London. A stronger rand is a negative for exporters, as it weakens profits when overseas earnings are brought home.

“The rand firming does take some of the shine off our big duallisted companies, and they have a predominant impact on our index levels,” said Paul Theron of asset manager Vestact.

The JSE Top 40 index fell 0.75% to 39 643, moving further away from life highs scaled earlier this month. The JSE All Share index ended 0.68% lower at 44 436.

Sappi, the world’s largest maker of fine paper used in glossy magazines, fell more than 4% to R30.89 after a ratings downgrade. Investment bank Credit Suisse cut its rating on the stock to “underperform” from “neutral“, citing management’s repeated lowering of guidance.

Impala, the world’s secondlargest platinum producer, fell close to 5% to R121.54.

BHP Billiton dropped 1.8% to R306.89.

Decliners outnumbered advancers 183 to 118 with 56 shares unchanged. Trade was relatively brisk with about 214 million shares changing hands.

The dollar rose, and global equity markets edged higher at the end of a volatile week, driven by worries, now dissipating, that the Federal Reserve will soon start to wind down economic stimulus.

Volatility eased as investors took the view that a Fed move to scale back its bond-buying, probably in the first quarter of next year, does not necessarily mean official interest rates will rise soon afterward.

In the lingo of Wall Street, “to taper is not to tighten”.

Atlanta Fed President Dennis Lockhart said on CNBC on Friday that even after the US central bank started to scale back its stimulus monetary policy was likely to be highly accommodating for some time, perhaps years.

Phil Orlando, chief equity market strategist at Federated Investors in New York said: “The Fed will not start to taper until the economy is able to walk on its own. That’s a positive.”

MSCI’s all-country world equity index, which tracks shares in 45 countries, rose 0.31%. On Wall Street, the Dow Jones industrial average rose 15.64 points or 0.1%, to 16 025.63, the S&P 500 gained 4.61 points or 0.26%, to 1 800.46 and the Nasdaq Composite added 16.083 points or 0.41%, to 3 985.238.

Solid US data this week also eased concern that weaker growth in China and the eurozone might set back the fragile global economic recovery, pointing to a gradually improving outlook for next year, albeit with less Fed money printing.