A strong rand and weak overseas markets hammered South African shares on Wednesday despite hefty advances by gold shares on the back of a firm bullion price, traders said.
By 0900 GMT, the all-share index had dropped 0,9% or 90,22 points to 10,422.73 as falls in major counters failed to offset a 5,4% gain in gold mining stocks.
Dollar weakness was the driving force behind both the gains and the losses, traders said, with a strong rand drawing down big-hitting stocks like mining giant Anglo American that draw earnings in foreign currency and pay costs in rand.
The greenback’s wobbly performance helped drive the rand below the key 10/dollar mark on Tuesday, where it continued to hover on Wednesday morning. By 0900 GMT, the rand was at 9,97.
Anglo gave up 1,6% or 280 cents to R168 as a result. Dual-listed stocks like luxury goods firm Richemont were also knocked. Richemont slithered three percent or 65 cents to R20,85.
SABMiller, which is listed in London dribbled down 2,8% or 230 cents to R79,05 after saying it planned to raise cash through a share placing.
Other weak performers included technology and telecoms stocks. ”M-Cell and Didata are down because of a weaker Nasdaq,” said Eddie Monale, a trader at Legae Securities in Johannesburg.
Mobile phone operator M-Cell dipped 1,5% or 16 cents to R10.75 and IT firm Dimension Data fell 2,6% or 15 cents to R5,65 after the tech-laden US Nasdaq index slithered on Tuesday as wariness about the health of corporate America persisted.
But gold stocks went against the grain after bullion moved sharply higher in New York on Tuesday. The metal closed at $316,25 an ounce, compared to around $313,80 when the South African stock market closed on the back of the weak US dollar.
It was trading at $316.35 by 0857 GMT.
Unhedged producers Gold Fields, Harmony and Durban Roodeport Deep (DRD), which are fully exposed to movements in the gold price, were among the biggest winners.
Gold Fields, the most traded stock by deals, jumped 6,5% or 840 cents higher to R137, Harmony bagged a 5,5% or 858 cents gain to R165,70 and marginal miner DRD pushed 3,2% or 140 cents higher to R45,40.
The country’s top producer AngloGold was more subdued than its major peers, as it still retains some hedges. It pulsed 4,8% or R26 higher to R570. – Reuters