S.Africa's rand rangebound, bonds edge up, stocks dip

By Stella Mapenzauswa and Gugulakhe Lourie

JOHANNESBURG (Reuters) - South Africa's rand was largely steady against the dollar on Wednesday, finding support mainly from higher commodity prices, while government bonds firmed on demand from corporates hedging their own debt.

Blue-chip stocks fell for a fourth straight day as foreigners exited the market amid a general global lack of appetite for emerging markets.

The yield on South Africa's benchmark 2015 government bond dropped 8.5 basis points to 7.765 percent, while the yield on the longer-dated 2026 issue fell 4.5 basis points to 8.98 percent.

"I suspect there's corporate hedging going on," said a bond dealer in Johannesburg.

"There are corporates issuing in the shorter part of the curve... (and) they would want to hedge their exposure by buying the corresponding government bond."

Latest data from the JSE securities exchange shows foreigners have sold a net 7.92 billion rand of South African bonds so far this year compared to net purchases of 9.8 billion rand during the same period last year.

But analysts say relatively higher yields -- the key repo rate is at 5.5 percent -- continue to support local paper.

"South African debt continues to remain attractive to foreign investors. Comparable low debt metrics, coupled with the high yields, still make South Africa an investment prospect worth considering," Tradition Analytics said in a note.

The rand was at 6.8649 against the dollar at 1620 GMT, up 0.19 percent from Tuesday's close at 6.88.

"There has been a lack of domestic factors and all in all it's been pretty quiet on South African markets," said Christopher Shiells, EM analyst at Informa Global Markets.

He said the currency was rangebound between 6.8500-6.9300, with some accounts selling dollar/rand but with importer demand providing support. "This range has continued with a lack of euro/dollar drivers ensuring it stays there," Shiells added.

The rand has reversed the bulk of its 10 percent drop against the dollar in the first two months of 2011, and is now down just 3.6 percent on the year.

But it has struggled to breach 6.85 this week and a test of the upper limit of its current 6.8500-9500 rnage could open up a retreat to the late February low of 7.04.

On Wednesday the JSE Top-40 index of blue chips dipped 0.08 percent to close at 28,677.65 while the broader All-share index shed 0.02 percent to 31,820.37.

"There might be foreign selling in our bourse. There is negativity towards emerging markets," said Wimar Buys, a trader at FFO Securities.

Petrochemical group Sasol lost 3.02 percent to 372 rand as oil prices arrested their recent losing streak.

Platinum producer Lonmin dropped 1.32 percent to 199.82 rand, diversified miner Exxaro lost 0.65 percent to 153 rand, and bourse heavyweight miner Anglo American was down 0.59 percent to 359.05 rand.

MTN, Africa's largest mobile phone operator, climbed 4.88 percent to 131.89 rand, making it the biggest percentage gainer in the blue-chip index. MTN posted a 20 percent rise in full-year profit and sharply increased its dividend payout.

Wed, 09 Mar 2011

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