GROUP-5: 110 +13 (+13.40%)
South Africa's rand slumps on reports Ramaphosa may be fired
* Rand weakest since Oct. 10 after torrid week
* Benchmark bond yield rises to 3-month high
* Stocks flat, led by rand hedge shares
(Updates to reflect steeper rand falls, adds comments)
JOHANNESBURG, Oct 20 (Reuters) - South Africa's rand
weakened sharply on Friday and government bonds sold off, as
speculation that President Jacob Zuma may axe his deputy Cyril
Ramaphosa added to a climate of political uncertainty that has
Stocks were mostly little changed on Friday, with rand hedge
shares rising on the back of a weaker currency.
At 1527 GMT the rand was 1.3 percent weaker at
13.6900 per dollar, earlier hitting its weakest since Oct. 10
after losses of over 3 percent against the dollar this week.
On Friday it underperformed other developing market
currencies, which fell as expectations for fiscal stimulus in
the United States boosted the greenback.
"Other emerging markets are weaker but not as much as the
rand. That's because of lingering political uncertainty,
especially these rumours about Zuma axing Ramaphosa," said
Wichard Cilliers, a currency dealer at TreasuryOne.
The yield on South Africa's benchmark government bond due in
2026 rose 4 basis points to 8.835 percent, its highest
level since mid-July, reflecting weaker bond prices.
Zuma's spokesman told Reuters there was no basis for reports
that the president would axe Ramaphosa, but market participants
dumped local assets nonetheless.
Answering questions in parliament on Thursday about whether
he may be sacked, Ramaphosa said he could not speculate on
The ruling African National Congress (ANC) party, of which
Zuma is leader and Ramaphosa deputy, has been riven by bitter
infighting ahead of a party conference in December at which a
new leader will be chosen.
Analysts at German bank Commerzbank advised clients to trade
rand assets cautiously in light of the political turbulence and
said they expected the local currency to remain under pressure.
Zuma spooked investors earlier this week by appointing a
close associate to oversee a big nuclear power deal in his
second cabinet reshuffle in seven months.
The benchmark Top-40 index lifted 0.15 percent to
51,601 points, while the All-Share index ticked up 0.09
percent to 57,949 points.
Rand-hedged stocks, which make the bulk of their revenue
outside South Africa and tend to strengthen as the currency
weakens, were the biggest gainers with bourse heavy-weight
Naspers rising 1.29 percent to 3297 rand.
"For the most part it's all offshore companies who earn
their turnover or profit offshore, that's where the gains have
been seen," Independent Securities trader Ryan Woods said.
Limiting further gains, Group Five fell 14.40
percent to 10.70 rand after it said it would let Greenbay's
1.6 billion rand ($117 million) offer for its
European assets lapse by 1500 GMT on Friday.
($1 = 13.7289 rand)
(Reporting by Alexander Winning, Mfuneko Toyana and Tanisha
Heiberg; Editing by James Macharia)
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