Platinums lift JSE after Cyprus bailout

Johannesburg - The JSE rebounded in Monday morning trade‚ digesting news of Cyprus securing a bailout from its international creditors early on Monday‚ with global markets recovering on investor optimism about the deal.

The deal ends a week of financial panic that threatened to see the small island nation become the first government to leave the eurozone.

The deal lines up €10bn in financing for the government and shuts Cyprus's second-largest bank‚ Cyprus Popular Bank PCL‚ imposing steep losses on deposits with more than €100 000‚ Dow Jones Newswires reported.

The country's largest bank‚ Bank of Cyprus PCL‚ will also be downsized aggressively‚ with large depositors there taking a hit.

But the deal does not include any losses for smaller depositors or depositors in other Cypriot banks‚ a proposal that derailed an initial attempt to reach a pact last week.

On the JSE‚ platinums and retailers added value after being oversold recently‚ while gold miners pulled back as investors turned away from perceived safe-haven investments.

At 9:56am the All Share [JSE:J203] index was 0.27% firmer at 40‚171.02 points and the Top 40 - (Tradeable) [JSE:J200] index added 0.23%. Platinums and general retailers added 0.67% and 0.79% respectively.

Asian bourses cheered the positive Cypriot news‚ as the Japanese Nikkei 225 index closed 1.79% firmer at 12‚546.46 points and the Hong Kong Hang Seng index was 0.54% firmer at 9.41am local time.

In Cyprus‚ wealthy foreigners - many of them Russian - have used the Cypriot lenders to store cash‚ taking advantage of lax banking laws and low corporate taxes‚ Barclays Bank said in a global note.

It was because of this reliance on deposits‚ which have reached about four times the size of Cyprus's economy‚ that the eurozone and the International Monetary Fund insisted that bank account holders contribute to the cost of saving the country and its banks‚ the bank said.

While there has been some speculation of large withdrawals or transfers out of Cyprus when banks reopen on Tuesday‚ capital control measures adopted by Cyprus as part of a wider banking bailout bill on Friday were now available to limit withdrawals from the country‚ Barclays said.