JOHANNESBURG, Feb 4 (Reuters) – South Africa’s rand firmed
against the dollar on Tuesday as risk appetite picked up after
China announced measures to minimise the economic impact from
the coronavirus epidemic, but the unit remained vulnerable to
concerns over a weak local economy.
At 1505 GMT, the rand traded at 14.7330 per dollar,
0.93% firmer than its previous close.
China’s central bank said on Tuesday that its huge liquidity
injections through open market operations this week showed its
determination to stabilise financial market expectations and
restore market confidence. [nB9N29N00J]
The measures came after a coronavirus-led rout that erased
almost $400 billion of market value from Shanghai’s benchmark
index on Monday.
“Sentiment, however, remains bruised and any indication that
cures for or containment of the coronavirus are failing, will
trigger another sell-off,” said RMB analyst Nema
The rand has tumbled 5.3% against the greenback since the
beginning of the year, also hit by signs of weakness in the
The currency remained vulnerable as problems at state power
utility Eskom pile pressure on an already ailing economy.
Eskom last week resumed nationwide blackouts, and said they
would continue through the week as it carried out long-delayed
maintenance on its creaking fleet of coal plants, threatening
already slack consumer demand and business activity.
On the bourse, stocks rose to a more than one-week high,
with retailer Steinhoff International topping the
gainers following a report of a possible takeover bid for its
European retail group Pepco.
Steinhoff soared to a more than seven-month high to record
its biggest one-day rise in more than two years. It closed
47.22% firmer at 1.59 rand.
Sky News reported that Advent International, which offloaded
Poundland for 200 million pounds ($260.36 million) a decade ago,
has teamed up with Hellman & Friedman and Mid Europa Partners to
prepare a blockbuster bid that could value Pepco Group at more
than 4.5 billion euros ($4.97 billion). [nL4N2A33TX]
“There might be speculative buying that if that deal goes
through it might unlock some value,” said Cratos Capital
equities trader Greg Davies.
If the deal is to go ahead, it will provide parent firm
Steinhoff with much-needed liquidity after it was forced to
write off billions after the revelations of an accounting
scandal worth an estimated $7 billion.
The Johannesburg All-Share index jumped 1.77% to
56,817 points, while the Top-40 index climbed 1.98% to
50,892 points as risk appetite returned.
Strong precious metal prices such as palladium , up
2.66% at $2,381, also helped boost platinum miners which were
among the top gainers on the bourse.
Impala Platinum jumped 6.98%, Anglo Platinum
rose 6.53%, while Royal Bafokeng Platinum
climbed 4.55% and Northam Platinum gained 4.48%.
In fixed income, the yield on the benchmark bond
was down 1.7 basis points to 7.943%.
Keywords: SAFRICA MARKETS/
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.