SARAH BULLEN, Johannesburg | Wednesday 5.00pm.
LOCAL stock enjoyed another strong day on the Johannesburg Stock Exchange as the players turned momentarily away from international developments to the strengthening rand. Dealers, while enjoying the rand’s newfound gains as it rose to R5,95 to the dollar, warn, however, that the gains may be shortlived.
Most of the demand for rands came as a result of a six month allowance on exporters repatriating their profits back to South Africa lapsed. The extra six-months given to exporters was announced by Finance Minister Trevor Manuel as part of the relaxation of exchange controls.
Despite the potential short term rand gains, the market sizzled on the day, with R1,5-billion in volume traded. Dealers said that a number of investors are taking the stance that South Africa is at the top of its interest rate cycle and is set to return to a growth period as soon as the interest rates start falling.
Accordingly, the high growth sectors of financial services and information technology were star performers, with IT stock jumping up to 20%. A number of dealers, however, have said that the bullish view on interest rates is premature, as international fundamentals have not changed. All eyes are on United States Federal Reserve chairman Allan Greenspan’s speech to the House budget committee on Wednesday afternoon for a further indication of the US’s stance on lowering interest rates.
The bond market also rallied, with the R150 trading around 17,323% for most of the day before ending flat a 17,45% yield.
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