JOHANNESBURG: South Africa’s rand held steady against a weaker dollar on Tuesday as investor optimism that a U.S.-Mexico deal will help avert a global trade war boosted appetite for riskier assets.
Retail firm Woolworths led the bourse higher, as several retailers rose on the back of demand in the sector.
At 1518 GMT the rand was largely unchanged at 14.1650 per dollar, after rallying briefly to 13.9525 earlier after parliament withdrew an expropriation bill passed by in 2016 that allowed the state to make compulsory purchases of land.
The thrust of the bill, which had not been signed into law, has been overtaken by a proposal by the ruling African National Congress to change the constitution to allow the expropriation of land without compensation.
Halen Bothma, an analyst at ETM Analytics, said trading was largely range-bound up until the news on land expropriation.
“The market is very sensitive to news around the land expropriation topic, which is understandable because of its importance to the South African economy,” Bothma said.
“(The rand) reacted strongly but it has erased those moves as people have realised it doesn’t change anything.”
Having tumbled to 2-year lows just shy of 16.0000 mark earlier this month, as the massive selloff in Turkish lira spread to other emerging markets, the rand has seen increased intraday volatility in response to news.
The rand was steady as traders eyed talks between the United States and Mexico who agreed on Monday to overhaul the North American Free Trade Agreement, putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-nation pact.
In fixed income, the yield on the benchmark government paper due in 2026 added 0.5 basis points to 8.875 percent.
On the bourse, the Top-40 index was up 0.61 percent to 53,883 points while the broader all-share index rose 0.64 percent to 60,039 points.
Retailers Foschini, Truworths and Woolworths all rose. Woolworths led the blue-chip Top-40, closing 4.1 percent higher.
“We are getting the feeling that foreign investors are coming into our market thinking that retail is where the value is,” said Greg Davies, a stock trader at Cratos Capital.
“Local fund managers have probably sold those stocks too low and they have decided to start the bargain hunting here.”
Building materials retailer Cashbuild bucked the trend, falling 3.21 percent after reporting a 9 percent decline in annual profit as costs rose and demand dipped.
Source: Brecorder
