Friday, 17 June 2011 - 20:00

 

Charts

S.Africa stocks tumble to 3-month low, rand stronger

By Phumza Macanda and David Dolan

JOHANNESBURG (Reuters) - South African stocks tumbled to their lowest close in three months on Friday, sliding 1.3 percent as investors hammered everything from miners to telecoms on concerns about Greek debt and global growth.

The rand ended the week on firmer footing, however, as exporters came in to sell dollars, sending the currency up as much as 1.3 percent and making it the best performer on the day among emerging market currencies tracked by Reuters.

Concerns about the Greek debt crisis rattled investors, who fled South African equities as part of a global sell-off of riskier assets, stock traders said.

The strength in the rand also made it easier to sell mining firms, who sell metal for dollars but pay costs in rand.

"Gold stocks are under pressure and have been for some time," said Martin Lentsoane, an equities trader at Newstrading.

Because of the stronger rand, miners that have most of their operations in South Africa, such as Harmony Gold, came under the most pressure.

"Harmony, whose exploration is focused mainly in South Africa is under more pressure than those with diversified gold exploration," Lentsoane said.

The Top-40 index of blue chips fell 1.3 percent to 27,324.34, its lowest finish since mid-March.

The All-share index dropped 1.1 percent to 30,669.26.

Harmony, South Africa's third-largest gold miner, tumbled 4.3 percent to 84.13 rand.

Shares of Naspers, Africa's largest telecom and media firm, dropped 4.2 percent, tracking losses in China's Tencent Holdings, in which it owns a 30 percent stake.

Tencent, China's top Internet firm, is now down 15 percent for the month. Traders said uncertainties around "variable interest entities" -- corporate structures often used by Chinese internet companies -- were keeping investors wary on the sector.

STRONGER RAND

The rand firmed by 1.3 percent, and was last trading at 6.78 to the dollar from a close of 6.8530 on Thursday in New York.

But Friday's moves could have been exaggerated by thin trading volumes in Johannesburg as some dealers were off after a public holiday on Thursday.

Government bonds also firmed in line with the rand, with yields coming off multi-week highs hit this week as foreigners pulled back a bit from buying local paper.

A dealer said exporter selling kicked in around the 6.90 area, halting the rand's losses and it bounced from three-week lows of 6.9066 hit Thursday.

Against the euro the rand was trading at 9.66 after hitting 5-week highs of 9.6082 on Thursday.

"The rand has continued to perform well against the euro and I think it is just the fundamental asserting itself, that is we continue to see positive inflows into South Africa," said a dealer at Absa Capital.

In the fixed-income market, the yield on the 2015 bond fell two basis points to 7.56 percent and that on the 2026 paper was down 2.5 basis points to 8.615 percent.

But bonds end the week weaker, with yields are up by more than 10 basis points as foreigners have sold over 2 billion rand worth of bonds this week, pushing yields to three-week highs.

The spread between the South African 10 year bond and its U.S. equivalent has climbed 22 basis points this week to 5.461 percent as foreigners dump local paper.

Fri, 17 Jun 2011

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