File photo: AP

Johannesburg‚ Dec 3 (I-Net Bridge) - The South African bond market was softer in quiet morning trade on Monday on the back of a weaker rand following Friday's release of a record foreign trade deficit.

“This morning we have seen a continuation of the selling pressure that we saw on Friday afternoon after the October foreign trade data. Things could improve if the local PMI (purchasing managers index‚ due at 11am) is better than expected‚ as the Chinese PMI has seen an easing in the selling orders‚” a local bond trader said.

At 8.48am‚ the benchmark R186 was bid at 7.620% and offered at 7.590% from 7.580% at Friday's close and 7.550% at Thursday's close. The R157 was trading at 5.520% from 5.495% at its previous close. The R207 was bid at 6.545% and offered at 6.515%‚ from its previous close of 6.505%.

The rand was bid at R8.8922 per dollar from Friday's close of R8.8909 and Thursday's close of R8.7842.

Absa Capital said in its morning report that it expected an improvement in the local PMI for November.

“As most strikes were resolved before November‚ we think November's PMI will show an improved performance compared with the previous two months. The expected business conditions subindex has improved markedly recently (most probably due to the improvements in SA's trading partners' economies)‚ which further supports the notion of a rise in the PMI should these expectations translate into real orders‚” Absa Capital said.

It noted that the PMI was in negative territory for the second month in October‚ at 47.1‚ below the 50-point level separating expansion from contraction.

“Categories that dragged the overall figure down were the all-important new sales orders and business activity indices. While the strike disruption was concentrated in the mining industry‚ manufacturers felt the impact not only as producers lower down the chain‚ but also as suppliers to the mining industry. The transport strike also had an adverse effect‚ albeit leaving a positive mark on the 'backlog of orders' sub-PMI category‚” the bank said.

Looking to the November PMI‚ it said: “The only negative factor is the inventories/new sales order ratio‚ which fell once again during October despite having been below parity for a number of months already. This implies that businesses could attempt to sell off old stock before producing more goods on the back of increased demand.”

Foreigners were net sellers of R259.788 million of South African bonds including repo transactions on Friday after net purchases of R213.573 million of local bonds on Thursday‚ data released by the JSE shows.

Nominal cumulative volume was R58.896 billion on Friday from R68.834 billion on Thursday.

Foreigners were net sellers of R200.148 million of local bonds excluding repo transactions on Friday after net purchases of R1.173 billion of local bonds on Thursday.

For the year to date foreigners have been net buyers of R91.944 billion of local bonds‚ excluding repo transactions. In 2011 they were net buyers of R47.359 billion worth of local bonds‚ excluding repo transactions.

In the year to date foreigners have been net buyers of R83.417 billion of local b

8.48am Range so far Previous Close

(6.48am GMT)

R186 (2026) 7.620% bid 7.600% - 7.620% 7.580%

R157 (2016) 5.520% 5.490% - 5.530% 5.495%

R207 (2020) 6.545% bid 6.525% - 6.545% 6.505%

Bond Exchange of South Africa (in billions of rand)

Thursday Friday

Nominal cumulative volume R68.834 R58.896

Net foreign purchases/(sales) R0.214 (R0.260)

Net foreign purchases/(sales) in 2012: R83.417 billion

Net foreign purchases in 2011: R37.501 billion

Repo rate: 5.0%