Views Article – Sharenet Wealth

Asia, Forex

South African assets drop on global risk aversion

(Updates throughout)

JOHANNESBURG, Oct 21 (Reuters) – South Africa’s rand, stocks and government bonds fell on Thursday as risk aversion rippled through global markets.

At 1552 GMT, the rand traded at 14.5800 against the dollar, down around 1.2% on its previous close.

The Johannesburg Stock Exchange’s Top-40 index closed down 1.35%, and the yield on the government’s 2030 bond rose 12 basis points to 9.475%.

Analysts linked the sour market mood to factors including rising global inflation, an economic slowdown in China and concerns over default-threatened property developer China Evergrande Group.

The risk-sensitive rand had gained on Wednesday as September local inflation data reinforced the view of some traders that the central bank will raise interest rates next month.

The South African Reserve Bank has kept its main lending rate on hold at a record low of 3.5% for its past seven meetings, lagging other emerging market central banks like those of Russia and Brazil which have tightened monetary policy substantially.

On the Johannesburg bourse’s blue-chip index, Thursday’s gainers included luxury goods company Richemont and retailer Mr Price which both rose around 1.3%. Fallers included miner Exxaro and petrochemical firm Sasol , which dropped 5.4% and 4.7% respectively. (Reporting by Alexander Winning; Editing by Kirsten Donovan)

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