MICHAEL METELITS, Johannesburg | Wednesday 5.30pm.
SOUTH Arican markets felt an emerging market pinch on Wednesday, after Russian President Boris Yeltsin fired economic reform cheif Yevgeny Primakov and his entire Cabinet for failing to produce results.
Additionally US Secretary of the Treasury Robert Rubin resigned, to be replaced by Lawrence Summers. The switch comes at a time when the US economy is considered too “hot”, or growing too fast. While Summers is highly respected, the shift increases uncertainty in world markets looking to Wall Street for direction.
The turmoil spilt over to other emerging markets and the JSE, local bonds and the rand felt the sting.
After a firm open, the JSE went south. The all share dropped 90 points for a loss of 1,31%, while industrials had a slightly better day, giving up 72 points for a loss of 0,99%.
Financials, particularly vulnerable to negative international economic sentiment, lost 220 points for a chunky loss of 2,21%. The safe haven character of gold muted the losses of recent days, keeping bullion losses to 4 points or 0,39%.
Bonds suffered a recoil from emerging market debt, as the Primakov problem affected sentiment around the world. The benchmark R150 lost 28 basis points from its Tuesday mark of 14,61% to 14,89%.
The rand felt the same pressures as bonds, and reacted accordingly. From its previous close of R6,16 to the dollar, the unit finished Wednesday at R6,20. Dealers feel there is good resistance at the R6,20 level and unless the Russian problem spreads it is unlikely to push the unit too much further.
Internationally, the Asian markets finished before Yeltsin dropped his own bomb, and the Nikkei-225 managed a 204 point gain for a profit of 1,22%, while Hong Kong’s Hang Seng jumped 138 points for a 1,04% gain.
Europe felt the full brunt of the Russian blip, although losses were muted as long-term confidence prevailed. London’s FTSE-100 slipped 43 ponits or 0,67%, while Frankfurt’s DAX gave up 21 points or 0,41%.
Paris’ CAC-40 had the easiest day of the European bourses, getting away with losses of only 14 points or 0,31%.