STANBANK: 17,015 -119 (-0.69%)
South Africa's rand slumps after GDP shocker, stocks up
* Q1 GDP down 3.2% on quarterly basis
* Central bank mandate news also weigh
* Stocks lifted by heavyweights
(Updates prices, adds stocks)
JOHANNESBURG, June 4 (Reuters) - South Africa's rand slumped
on Tuesday after data showed the worst quarterly economic
contraction in a decade at the start of 2019, while stocks
The rand was also hammered by news that South Africa's
governing party has agreed to expand the central bank's mandate
to include employment and growth as well as
Investors are nervous about any changes that could curb the
independence of the South African Reserve Bank (SARB).
At 1530 GMT, the rand was 1.8% weaker at 14.7000
"The problem is that the economic data release has
accelerated even the most pessimistic concerns regarding the
health of the South African economy," said Jameel Ahmad, global
head of currency strategy and market research at online trading
The statistics office said gross domestic product contracted
a quarterly 3.2% in the first three months of 2019, lagging the
1.7% decline economists had expected and showing President Cyril
Ramaphosa's growth drive is struggling to gain traction.
Bonds also weakened, with the yield on the benchmark 10-year
issue up 3 basis points to 8.45%.
In equities, stocks strengthened as the rand weakened on the
poor GDP numbers.
The broader All-Share index closed stronger 0.38%
to 56,500 points, while the blue-chip Top-40 index
increased 0.48% to 50,452 points.
Leading the blue chips was luxury brand Richemont,
which gained 5.57% to 112.74 rand, while mining company Gold
Fields climbed 5.010% to 71.46 rand on the back of a
near three-month gold price peak.
On the downside, banking stocks took a hit slipping 3.83% to
94.45 rand. Standard Bank shed 4.21% to 193.97 rand,
while Absa fell 4.210% to 165.99 rand.
The weak GDP numbers weighed quite heavily on the banks,
although the heavyweights were up, said Michele Sanpangelo, a
portfolio manager at Independent Securities.
"It's definitely a tale of two sectors; ones that like the
weak rand and ones that don't," Sanpangelo said.
(Reporting by Olivia Kumwenda-Mtambo and Onke Ngcuka; Editing
by Catherine Evans)
First Published: 2019-06-04 12:39:50
Updated 2019-06-04 18:05:11
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