VODACOM: 12,637 0 (0.00%)
South Africa's rand firms on Chinese investment; stocks rally
* Rand rises to three-day high
* Kumba Iron Ore gains on new dividend policy
(Updates rand and stocks; Adds traders comments)
JOHANNESBURG, July 24 (Reuters) - South Africa's rand firmed
more than one percent on Tuesday to a three-day best as demand
for the local currency was boosted by China's promise of a $14.7
Stocks rose, led by Kumba Iron Ore after it
reported a new dividend policy.
At 1420 GMT the rand was 1.04 percent stronger
against the dollar at 13.3200 from its close on Monday.
President Ramaphosa announced the investment agreement at a
news conference after talks with Chinese President Xi Jinping.
Traders said the investment had provided some temporary
relief from the risk-off sentiment affecting the rand and other
emerging market currencies.
"The news that China would invest in the local economy has
supported some foreign inflows," said senior trader at Standard
Bank Oliver Alwar.
Traders noted that a sliding greenback had lifted most
emerging market currencies, and that the size of the rand's move
firmer was partly down to low trading liquidity.
"I don't expect that there is going to be a huge bull trend
coming into the emerging market. There are just too many
uncertainties with the trade wars," said Ashley Dickinson,
trader at SASFIN.
The rand has seen volatile trade in the past two weeks, and
fell sharply last Thursday when the central bank warned that
risks to inflation were rising and the outlook for economic
growth had worsened.
The currency however remains a favoured carry-trade target
owing to the return offered by low inflation and relatively high
lending rates against a backdrop of economic reform promised by
Ramaphosa since his election in February.
Bonds also gained, with the yield on the benchmark paper due
in 2026 up 4.5 basis points to 8.73 percent.
On the bourse, shares tracked a global stock market rally.
The blue-chip Top-40 index closed up 1.01 percent
at 50,990 points, while the broader All-Share index
rose 0.88 percent to 57,055 points.
Kumba was one of the biggest gainers, up 2.9 percent to 299
rand after unveiling a new dividend policy that will distribute
50 percent to 75 percent of headline earnings.
On the flipside, telecom group Vodacom shed 2.6
percent to 125.51 rand.
"Vodacom missed market estimates, as analysts thought the
numbers would be even better," said Cratos Capital equities
trader Greg Davies.
Vodacom, South Africa's biggest mobile phone operator by
market value, reported a 4.2 percent rise in group revenue for
the first quarter.
(Reporting by Patricia Aruo, Mfuneko Toyana and Nomvelo
Editing by James Macharia)
First Published: 2018-07-24 13:47:02
Updated 2018-07-24 17:57:32
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