STANBANK: 19,456 -622 (-3.10%)
South Africa's rand, stocks edge higher ahead of Moody's review
JOHANNESBURG, March 29 (Reuters) - South Africa's rand
gained on Friday, supported by increased investor appetite for
risk, even though traders were cautious before a review of the
country's sovereign rating by Moody's later this evening.
Stocks strengthened, led by banks and retailers on
expectations Moody's would not downgrade its Baa3 rating on
At 1502 GMT, the rand was up 0.96 percent at
14.4700 per dollar, as increased demand for Chinese assets amid
signs of progress at U.S.-China trade talks and a pledge by
Beijing to liberalise financial markets lifted emerging-market
Market focus was on the decision by Moody's, the last of the
top three ratings firms to give Pretoria's debt an investment-
grade mark. The other two, S&P and Fitch, have already
downgraded it to "junk".
While markets expectations were for the Moody's to hold the
rating at Baa3, some analysts expected the outlook to be cut.
"We continue to expect the outlook will drop from stable to
negative on South Africa's dual currency long-term sovereign
debt Moody's rating today - if the country review goes ahead,"
Investec economist Annabel Bishop said in a note.
"This negative outlook would signal a rating downgrade
eighteen months thereafter," she said.
Some economists, however, said the electricity crisis that
saw state utility Eskom impose nationwide rolling blackouts this
month, and an overall weak recovery in economic growth, have
raised the risk of a full downgrade.
In fixed income, the yield on the benchmark 10-year bond
shed 9 basis points to 8.61 percent.
In stocks, the Top-40 index closed up 0.74 percent
while the broader all-share rose 0.72 percent.
Banking shares rose 1.68 percent and general
retailers gained 3.4 percent, with Woolworths
jumping more than 5 percent to 46.48 rand and Standard Bank
3.3 percent higher to 185.23 rand.
"We have seen the market looks fairly healthy, and things
like the banks and retailers are all looking sharply up because
those are the areas affected by a downgrade almost immediately,"
said Ryan Woods, market trader at Independent Securities.
(Reporting by Olivia Kumwenda-Mtambo and Tanisha Heiberg,
editing by Larry King)
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