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Rand firms in EM relief rally, Naspers boosts stocks

Local currency climbs as EM’s see relief from Turkish contagion.

The rand firmed nearly 1% on Wednesday in a broad emerging market relief rally driven by the Turkish lira, while stocks were led higher by bourse-heavyweight Naspers.

At 1521 GMT the rand was 0.84% firmer at 12.46 compared to a close of 12.57 overnight in New York. In the previous session the rand lost more than two% after the dollar gained support from rising US bond yields.

“Emerging markets have bounced back quite aggressively,” said Rand Merchant Bank currency trader Jan Sluis-Cremer.

“There are no real tangible factors driving the rand. It’s all just majority of emerging markets on a bit of a pull back.”

Sluis-Cremer said the main support came from Turkey where the central bank said it would take action against a sell-off in the lira.

The rand was also helped by better-than-expected retail sales data for March, which rose 4.8% year-on-year.

Some traders said the rand would struggle to hold onto the gains.

“Sentiment can change at any second, so trade is going to continue to be very volatile,” said currency trader at TreasuryOne Andre Botha, adding that the currency would probably trade in a 12.30-12.60 range for the next week or so.

Bonds were also firmer, with the yield on the benchmark paper due in 2026 down 2.5 basis points to 8.465%.

On the equities market, the Johannesburg All Share Index closed 1.26% firmer to 58 621 points, while the blue chip Top 40 Index rose 1.51% to 52 108 points.

Internet and entertainment group, Naspers, rose 5% after Chinese gaming giant Tencent Holdings, in which Naspers owns a 31% holding, clocked a better-than-expected jump in quarterly net profit.

Mining firm Tharisa climbed 1.3% to R20 per share after saying it has bought a 90% stake in Salene Chrome Zimbabwe Limited, gaining access to rich chrome deposits and growing its presence in Zimbabwe.

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