Port Elizabeth - Just about every share which will benefit from a weaker currency surged ahead last week when the rand reversed a week’s worth of gains to crash back to the wrong side of R11 to the dollar after international ratings agency Moody’s cut SA’s credit rating.
On Friday afternoon the rand was sitting at R11.26 to the dollar compared to comfortably below R10 about two weeks ago.
It is difficult to comprehend that the rand was at R8.00 just a few months ago.
SA’s favourite rand hedge Richemont [JSE:RCH] increased by 6.6% on Friday alone to end the week 5.8% higher, despite announcing quite lacklustre interim results earlier last week.
Anglo American [JSE:AGL] and BHP Billiton [JSE:BIL] increased by more than 5%.
Even Kumba Iron Ore [JSE:KIO] eked out a gain of 2% - despite its announcement that headline earnings are set to decrease in the year to December due to the sharp drop in iron ore prices.
The weaker rand assisted the share prices of gold mines as well to counter the fall in the gold price. AngloGold Ashanti [JSE:ANG] increased more than 12% and Gold Fields [JSE:GFI] ended the week 9% higher.
However, the rand could do little to help Harmony Gold [JSE:HAR] as investors were selling out after news that losses at its mostly marginal operations is still running to billions of rand.
Harmony ended the week 4.2% lower on top of the previous week’s 10% drop. Angloplats [JSE:AMS] and Lonmin [JSE:LON] both benefited from the weaker rand with Amplats 5.5% higher and Lonmin 6.6% higher.
The weaker rand brought little joy for cellular giant MTN [JSE:MTN] due to the group’s higher foreign dominated debt and continued high capital expenditure in African countries – which must be paid in foreign currency.
Shares of most local companies were little changed with banks slightly lower and a few food producers and food retailers slightly stronger.
It seems investors are taking a cautious approach and carefully weighing good news against the bad and then ending up not doing much.
That said, there seems to be an underlying strength in the market with investors and fund managers taking advantage of whatever opportunities arise to buy shares on the slightest sign of weakness.
The week ahead
Companies with March year-ends will start to publish interim results for the first half to September this week and a few with September year-ends (and hard-working accountants) as well.
Eastern Platinum [JSE:EPS] and speculators’ favourite Invicta Holdings [JSE:IVT] will be first with interim results this week. Brait [JSE:BAT], Illovo [JSE:ILV], Tongaat [JSE:TNT], Investec (JSE: INL and INP), Mr Price (JSE: MPC), Naspers (JSE: NPN), Reinet (JSE: REI) and SABMiller [JSE:SAB] are due to follow over the next few weeks.
Paper and pulp producer Sappi [JSE:SAP] will announce final results for the year to September this week. Astral [JSE:ARL], Barloworld [JSE:BAW], Coronation Fund Managers [JSE:CRN], Nampak [JSE:NPK] and PPC [JSE:PPC] are also due to announce their annual results soon.
- Fin24