HARMONY: 4,575 +64 (+1.42%)
South Africa's rand hits 7-week low as trade tensions heat up
* Rand trading at weakest level since June 13
* Stocks hit more than 2-week lows
* Investors broadly scale back risky bets
* Gold bucks downward trend on safe-haven asset demand
(Adds stocks, updates levels)
JOHANNESBURG, Aug 5 (Reuters) - South Africa's rand slipped
to seven-week lows against the dollar on Monday, as prospects of
a sharp escalation in the U.S.-China trade war turned investors
Emerging market currencies also softened broadly, with
MSCI's index of 25 currencies, which is heavily
skewed towards Asian currencies such as South Korea's won,
Taiwan's dollar and China's yuan, dropped 1.2%, the biggest
daily decline since June 2016.
The fall came after Beijing vowed on Friday to retaliate
against U.S. President Donald Trump's decision to slap 10%
tariffs on the remaining $300 billion of Chinese imports, a move
that ended a month-long trade truce.
At 1517 GMT, the rand was 0.61% lower at 14.8800
per dollar, trading at its weakest levels since June 13.
"With little in the way of good news, we can expect the rand
to try and test the R15.00 level with risk sentiment currently
hugely in favour of safe-haven assets," Andre Botha, a Senior
Dealer at TreasuryONE, said in a note.
In fixed income, the yield on the benchmark government bond
due in 2026 added 7 basis points to 8.440%.
In the equities market, both major indexes were also
hammered by fast receding risk appetite, with the Johannesburg
All-Share index and Top-40 index weakening to
more than two-month lows.
With the global fallout most evident in the Asia region,
China's Tencent, in which Naspers holds a over 30%
stake, fell 4.27%.
This resulted in the South African e-commerce giant Naspers
weakening 4.58% to 3,350 rand.
"Global markets are rather ugly at the moment, which is not
a great way to start the week," portfolio managers at Vestact
said in a note.
The All-Share index closed 2.31% lower at 54,975 points,
while the Top-40 index ended the day 2.52% down to 49,066
points, after both weakened to levels last seen on May 30.
Bucking the trend, the Gold index strengthened
6.67% as investors sought safe-haven assets. Gold Fields
jumped 8.14% to 85.55 rand, Sibanye-Stillwater
climbed 6.97% to 19.94 rand, while Harmony Gold rose
6.40% to 41.37 rand.
(Reporting by Nqobile Dludla and Olivia Kumwenda-Mtambo;
editing by John Stonestreet and Hugh Lawson)
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