JOHANNESBURG - The domestic stocks index rose as much as 5percent yesterday, putting the main index on track for its biggest one-day gain in more than three years, on hopes the resignation of Jacob Zuma as president paved the way for new leaders to quicken the pace of economic growth.

The currency remained on the front foot, soaring to its firmest since early 2015 in the wake of Zuma’s exit. Analysts have, however, warned that the rally faces serious obstacles ahead of a budget speech next Wednesday.

Zuma quit late on Wednesday, reluctantly heeding orders by the ruling ANC to bring an end to a nine-year tenure punctuated by scandals, stagnant economic growth and policy uncertainty.

At the close of trading, the blue chip JSE Top40 index had surged 3.97percent to 52565.45 points, pulling back from a high of 53072 achieved earlier but still on course for its biggest one-day gain since September2015.

The broader all share index was up 3.72percent at 59533.1 points.

South African banks, considered the barometer of both economic and political sentiment, were a feature on the gainers’ list. The banking index surged 5.8percent with Nedbank rising 5.37percent to R290.83 and FirstRand up 6.43percent to R75.35.

Banks have largely borne the brunt of Zuma’s policy decisions that included the sacking of two respected finance ministers, Nhlanhla Nene and Pravin Gordhan. That, along with a weak economy, contributed to sovereign credit ratings downgrades to junk by S&P Global Ratings and Fitch.

In reaction to Zuma’s resignation, ratings agency Moody’s said it was focused on the new leadership’s response to economic challenges. S&P Global Ratings said the leadership change would not immediately affect the credit status.

Cyril Ramaphosa was sworn in as president yesterday.

Ramaphosa, who has vowed to fight corruption and revitalise the economy, is seen by business leaders and investors as well placed to turn around the economy.

South Africa’s GDP is estimated to grow by less than 1 percent this year.

In the foreign exchange market the rand advanced to levels last seen in February 2015. At 5pm, the rand bid at R11.6304, to the dollar, 25.46cents firmer than at the same time on Wednesday, having reached a session-best of R11.6025 earlier yesterday.

- REUTERS