Naspers drags JSE down, rand in biggest decline

THE RAND headed for its biggest drop against the dollar since 2016, according to Bloomberg, buffeted by headwinds including a downbeat assessment of the economy by Moody’s Investors Service and a plunge in the biggest company on the JSE.

Moody’s report, “Government of South Africa: Fiscal slippages likely this year, but medium-term targets remain within reach”, found that the pace of South Africa’s fiscal consolidation would be slower than government forecast as weaker than expected economic growth and a rising public sector wage bill acted as fiscal headwinds.

Moody’s Vice President and co-author of the report said: “Growth this year is expected to be lower than the government's own estimates, weighing on tax revenues, while the public sector wage agreement in June also brings extra, unbudgeted costs.”

The rand gave up 3.4 percent after this revelation, which was made after SA Reserve Bank Governor Lesetja Kganyago said he was worried about the country’s growth projections.

At 5pm the domestic currency was bid 37c weaker than Tuesday’s same time bid at R14.57 a dollar. Against the pound sterling the rand was 40c softer at R18.51 and to the euro, the currency declined 37c to R16.53.

Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, said the dollar gained strong momentum during overnight trading, lingering at its strongest in 13 months high, as gold declined to its weakest in 18 months, mostly driven by a weak euro compared to the USD.

“Emerging market currencies tracked the euro and commodities lower, with the rand once again trading in the R14.45-a-dollar region. This followed a robust rebound in both the rand and the Turkish lira as the Turkish central bank dropped liquidity requirements to assist with the struggling market.”

TreasuryONE senior currency dealer Andre Botha said the domestic currency was facing pressure from two sides with the US dollar on one side and the Turkish narrative on the other side. 

“There is a lot of volatility in the market, and depending on the sentiment swings we could easily see a 30 cent swing on the back of news headlines.
“We are still of the opinion that the Rand could track back a little once the market has settled but in the meantime volatility is the name of the game,” said Botha.

Naspers, which accounts for 18 percent of the benchmark stock index, tumbled after Tencent Holdings, in which it owns a 31 percent stake, missed earnings estimates, according to Bloomberg. That raised concerns about outflows from the stock market. The benchmark index of equities fell the most since May.

JSE stocks also took quite a pounding with the blue-chip Top40 index giving up 3.76 percent to 49 615.06 points, while the broader all share index plunged 3.41 percent to 55 646.15 points.

Apart from Naspers, miners were the biggest losers among major movers where Goldfields tanked 10.85 percent to R37.30, followed by Kumba Iron Ore, which declined 9.67 percent to R263.31. Sibanye plunged 8.52 percent to R7.52, while Naspers fell 8.22 percent to R3060.88 and Anglogold Ashanti closed 7.52 percent at R109.31.

Leading gains were AB InBev, which added 2.82 percent to R1427.14 followed by Curro, which ticked up 2.7 percent to R32.30. MAS increased 2.02 percent to R20.71, while Sappi notched up 1.49 percent to R94.15 and Quilter scored 1.39 percent gains to R27.

- BUSINESS REPORT