WBHO: 11,491 -45 (-0.39%)
South African rand plunges on recession shock, stocks falter
* South African slips into technical recession
* Rand weakens as much as three percent
* Stocks also down; MTN shares hit by Nigerian tax bill
(Updates prices, adds analyst's quote)
JOHANNESBURG, Sept 4 (Reuters) - South Africa's rand fell as
much as three percent on Tuesday as the economy slipped into a
technical recession in the second quarter and missed economists'
At 1600 GMT, the rand traded 2.82 percent weaker at
15.3000 versus the dollar.
The economy contracted by 0.7 percent in the second quarter,
pushing the country into recession after a revised 2.6 percent
contraction in the first quarter, data from Statistics South
"The economy remains lacklustre, partially driven by policy
uncertainty. Investment in manufacturing and development has
been hampered by uncertainty regarding the mining charter and
land redistribution," said Bianca Botes, an analyst at Peregrine
The contraction was contrary to a Reuters poll of economists
predicting a 0.6 percent expansion.
Bonds were also weaker, with the yield on the benchmark
government debt due in 2026 up 20.5 basis points to
9,21 percent, its highest since June 20, while sovereign dollar
bonds sold off across the curve.
On the bourse, the blue chip Top-40 index fell 1.42
percent to 51,691 points while the All-Share index was
down 1.4 percent to 57,892 points.
"(There is) a lot of pressure on banks and retailers, as
expected with such a weak rand. The emerging market sell-off
continuing and the dollar going on a bit of a rampage are also
having an effect on our market," said Vasili Girasis, market
trader at BP Bernstein.
The biggest faller was telecommunications operator MTN
Group's., whose shares plunged 17.05 percent to close
at 72 rand after it reported it had been slapped with a $2
billion tax bill by Nigerian authorities.
Further losses were seen in Aspen Pharmacare,
Africa's biggest drugmaker, which was down 7.49 percent to
270.86 rand. It flagged lower revenue for the second half of its
financial year, impacted by the stronger rand.
"They got hit by the currency, but going forward, it could
be an opportunity to be buying now, with the rand weakening the
way it has," said Girasis.
Health and life insurance group Discovery and
construction company Wilson Bayly Holmes (WBHO), which
released their full year results, fell by 4.12 percent and 4.67
(Reporting by Nomvelo Chalumbira and Patricia Aruo
Editing by Gareth Jones)
First Published: 2018-09-04 11:47:36
Updated 2018-09-04 18:28:17
© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.