Rand steady despite concern Russia may invade Ukraine

Shares in Prosus and Naspers slump.
Image: Moneyweb

The South African rand was relatively steady on Monday despite global markets being shaken by increased worries that Russia will invade Ukraine.

At 21:11, the rand traded at 15.1658 against the dollar, within touching distance of its 15.1225 closing level on Friday.

The rand has been resilient in the past few weeks despite concerns over the Ukraine situation, with high real domestic yields, strong terms of trade and fresh reform pledges from President Cyril Ramaphosa in its favour.

Analysts say South Africa looks attractive to investors looking for exposure to emerging markets at a time when Russian assets are weighed down by the risk of heavy Western sanctions and Turkish assets are hurt by concerns over the country’s monetary policy.

On Wednesday, South Africa’s Finance Minister Enoch Godongwana will present the 2022 budget, where investors will be hoping for reassuring signs on the debt trajectory after the National Treasury pledged to cut the budget deficit in a November mid-term budget.

Click here for full budget coverage on the day

In the equities market, stocks closed in the red, hurt by tech giants Prosus and Naspers following heavy losses in China’s Tencent Holdings on fears of a further regulatory crackdown in China.

Read: Tencent leads China tech selloff

Shares in Prosus, which holds a stake in Tencent, fell by 7.74% to R1 029, while Naspers, which in turn holds a stake in Prosus, slumped by 8.03% to R2 057, both to a near two-year low.

Tencent fell as much as 6.3% in Hong Kong as local tech stocks extended their losses in response to China’s new rules to promote a faster recovery from the pandemic in the services sector.

There were also concerns in the market about whether a potential summit between the U.S. and Russian presidents to discuss Ukraine would actually go ahead.

The Kremlin on Monday said there were no concrete plans for a summit over Ukraine between U.S. President Joe Biden and Russian President Vladimir Putin.

The Johannesburg All-Share index fell 1.1% to 75 528 points, while the Top-40 index closed 1.11% weaker at 68 876 points.

The yield on the benchmark 2030 government bond was 4.5 basis points higher at 9.12%, reflecting a weaker price.

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