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JSE falls over 3%

Rand weakens as Ukraine crisis saps risk appetite.
Image: Guillem Sartorio/AFP/Getty Images

South Africa’s rand weakened on Friday, struggling to gain traction with appetite for risky assets sapped as the Ukraine crisis kept investors on edge.

At 11:55, the rand traded at 15.34 against the dollar, 0.93% weaker than its previous close, amid heightened investor anxiety after reports that Russian forces had attacked a nuclear plant in Ukraine — the largest of its kind in Europe.

Rand vs US dollar over 7 days

The rand has managed to recover from three-week lows hit on Wednesday as strong commodity prices offered support, but the escalation of Russian’s offensive in Ukraine has limited gains. South Africa is a rich commodity-exporting country.

South African stocks gave up earlier gains that were buoyed by positive company earnings to close in the red, as investors worried that surging commodity prices due to Russia’s invasion of Ukraine will add to global inflation.

The JSE All Share was down 3.42% at 74 744 points and the Top 40 down 3.33% at 68 521 by 11:58 on Friday.

JSE Alsi and Top 40

Naspers was down 7.48% to R1 696.99 and Prosus down 7.13% to R838.19 by 11:50.

In fixed income, the yield on the benchmark 2030 government bond ZAR2030= was up a single basis point to 9.59%, reflecting slightly weaker prices.

Emerging markets

Russia’s rouble swung between gains and losses in early Moscow trading on Friday, while emerging market stocks tumbled after Russian forces seized a huge nuclear power plant in Ukraine, sparking fears of a potential nuclear disaster.

Financial markets have been on edge amid new developments in the bombardment of Ukraine by Russian forces. A fire identified at a part of the Zaporizhzhia plant, Europe’s largest nuclear power plant had been extinguished.

Read: Russian forces occupy site of nuclear plant as fire contained

Britain, the European Union and the United States are ratcheting up financial sanctions on Russia to prevent its companies from using Western markets to raise funds, prompting exchanges and settlement houses to cut ties with Moscow.

“Russian assets are being destroyed in value. Stocks have plunged by close to 90%, and the Russian stock market will be closed until next week,” said Cristian Maggio, head of portfolio strategy at TD Securities.

“How do they offload positions that sit on their balance sheet without triggering dramatic losses or even taking the losses, and get rid of those toxic assets? These are the concerns in the head of the market now.”

The MSCI’s index for emerging markets equities MSCIEF plunged 1.8% to its lowest in more than one week, while its currencies counterpart .MIEM00000CUS fell 0.3%.

Investors have also been worried about surging inflation amid sky-high commodity prices.

As Russia is one of the world’s biggest exporters of key raw materials, the possible exclusion of supplies from the country has sent traders and importers into a frenzy. Commodity markets were on track on Friday for their biggest weekly gains in years.

Oil prices rose on signs of an escalation in the Ukraine crisis, and as fears of Western sanctions that could disrupt Russian oil exports outweighed the possibility of more Iranian supplies.

Read: Oil resumes wild rally as Ukraine says nuclear plant attacked

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Blood on the floor … ugh! And who’s fault is it? Three guesses. Someone up North, someone in the Far East or someone in Luthuli House?

Actually, it’s all three.

Fun fact, if you combine NPN and PRX their combined marketcap is now smaller than BHP.
Interesting times.

End of comments.

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