The rand plumetted to a five-year low on Thursday, battered by falling commodity prices and the unwinding of carry trade while bargain-hunting took local stocks to positive territory.
The Top-40 index was up 1,45% to 23 338 points while the broader all-share index rose 1,09% to 25 549,29 points.
At 3.51pm GMT, the rand was trading at 8,2750 to the dollar after falling to 8,3332 earlier, its weakest level since June 2003. The rand closed at 8,23 in New York on Wednesday.
Dealers said with gold and platinum — major exports of South Africa — touching an 11-month and 20-month low respectively, the rand outlook was bearish.
Ion de Vleeschauwer, chief dealer at Bidvest Bank, said: ”Commodities have taken a hit in the nose and that is driving commodity currencies. There were also stop losses triggered in New York last night and exporters are staying out of the market.
”The yen is also holding up well, meaning there is massive risk aversion out there,” he said, adding 8,50/dollar was a likely level in the next few days if the rand remained above 8,30 overnight and the dollar did not lose steam.
Government bonds were firmer after the 2010 bond switch auction pointed to demand for local paper.
Neil Evans, a dealer at Nedban said: ”The seven billion rand that was bought … was bought because [investors] believe nine-month horizon yields are going quite a bit lower.
”There are net buyers in the market, so it is a really positive sign. Basically the guys are saying the lower oil price is good for inflation.”
The yield on the 2015 bond was down six basis points to 9,22% and that on the 2036 bond fell seven basis points to 8,54%.
Stocks
A weaker rand lifted commodity shares, sending the resource-heavy local bourse higher.
Tubby Goodwin, a trader at Investec Securities said: ”The rand is bringing the resource counters high and that’s what’s making our market high, there’s no other reason for it.”
Another trader said bargain hunting was also in play.
Garth Mackenzie from BoE Private Clients said the likes of Exxaros, Arcelors and Kumbas have been sold down recently.
Kumba Iron Ore and AngloGold Ashanti, which both hit a year low on Wednesday, led the bourse on Thursday, jumping 9,38% to R210 and 7,51% to R186 respectively.
Index heavyweights Anglo American gained 6,96% to R334,80 while rival BHP Billiton rose 3,28% to R204,50.
Other gainers included Exxaro Resources which climbed 7,47% to R93,50, Liberty International up 3,25% to R143 and furniture retailer Steinhoff up 3,55% to R17,50.
Construction group Aveng was the biggest loser shedding 5,97% to R63.
Banking stocks also closed in the red, with First Rand was down 4,79% to R16,69, Standard Bank fell 4,92% to R88,90 and Absa dropped 4,61% to R107,80.
”[Banks] have also run a little bit hard lately. They’re just coming in for a bit of profit taking at the moment,” said BoE’s Mackenzie. – Reuters