Stronger rand pulls down major JSE indices

Johannesburg - The strong rand was again the major factor determining what happens on the JSE on Thursday.

As the unit again strengthened to below R13.00 to the dollar on indications that President Jacob Zuma may not have enough support to sack Finance Minister Pravin Gordhan, the prices of dual-listed shares dropped, pulling the major indices down.

Financial shares, which were sharply lower on Wednesday, were higher on the back of a stronger rand and on the prospect that Gordhan might still be around for a while. This is in direct contrast with what happened on the previous two days, when the rand weakened considerably on reports that Zuma was ready to get rid of Gordhan.

By mid-morning the All-share index was 0.47% lower at 52 199 points, as the Resources index dropped 0.47% and the Industrial index shed 0.92%. These indices include most of the big dual-listed shares on the JSE, which are very sensitive to movements in the rand.

The Top 40 index, which consists almost exclusively of dual-listed shares which represent more than half of the market’s value, gained 0.54% to 45 159 points by mid-morning. The Financial index was at that stage 0.42% stronger.

The rand was trading at R12.94/dollar, but analysts warned it could again drop sharply if Zuma does something that will be detrimental to the South African economy.

In the financial sector FirstRand [JSE:FSR] gained 1.65% to R49.14 and Standard Bank [JSE:SBK] traded 2.17% stronger at R154.12. Both shares were more than 4% lower in early trade on Wednesday on fears that Gordhan's sacking could lead a weaker rand, higher interest rates and a possible downgrade of South Africa’ s credit rating.

Barclays Africa [JSE:BGA] also strengthened and at mid-morning was 1.51% higher at R151.69. Nedbank [JSE:NED] was 0.91% stronger at R260.35.

Among the insurers Old Mutual [JSE:OML] was 0.95% higher at R34.93, but Sanlam [JSE:SLM] lost 0.46% to R68.68.

Naspers [JSE:NPN], the biggest share on the JSE which represents more than 12% of the market’s value, lost 2.01% to R2 300.00 on the strong rand, but Richemont [JSE:CFR] was only 0.08% lower at R101.80. Steinhoff [JSE:SHF] performed strongly and traded 1.72% higher at R64.90.

BHP Billiton [JSE:BIL] lost 0.45% in the resources sector to trade at R201.66, but Anglo American [JSE:AGL] was 0.66% higher at R199.18.