Stocks rally as central bank acts

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LOCAL stocks rallied by the most this year after the central bank stepped in to rescue the country’s largest provider of unsecured loans and emerging market equities rebounded from a six-week low.

The all share index snapped three days of losses to advance the most since December 27.

Lenders, including Capitec Bank and FirstRand, gained after the central bank took measures to protect African Bank Investments Limited (Abil) from creditors, the nation’s first bank rescue in 12 years.

“It was handled quickly and quite decisively,” David Mohr, the chief investment strategist at Old Mutual Wealth, said. “What any banking sector can’t afford is uncertainty.”

The all share index rose 1.68 percent to 51 523.27 points by the close in Johannesburg, after dropping 0.5 percent last week to the lowest level since June 27. Capitec climbed 0.66 percent to R221, while FirstRand advanced 1.87 percent to R44.23.

Gains in shares were “relatively broad”, Ferdi Heyneke at Afrifocus Securities said. “It’s difficult to say how long the rally may last” with increased volatility causing bigger swings in share prices, he said. – Bloomberg

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