Markets WRAP: Rand closes 1.44% weaker at R14.26/$

The rand ended the day 1.44% weaker at R14.26/$

The rand continued its decline on Friday, following the release of US GDP figures on Friday, which surprised on the upside. GDP ticked in at 2.1%, higher than the 1.8% the market expected, causing the dollar to strengthen, TreasuryONE said in a market update.

"The US data will put a rate cut into question at next week’s FOMC meeting, which is bound to cause some market volatility.

"The rand has gone from best performing EM currency to the worst-performing EM currency, as rebalancing is in order after the rand’s performance the past few weeks.

"The rand is under pressure and will start next week on the back foot," TreasuryONE said.

Closing indicators provided by TreasuryONE:

USDZAR 14.2611

EURUSD 1.1124

EURZAR 15.8598

GBPUSD 1.2385

GBPZAR 17.6577

AUDZAR 9.8495

CADZAR 10.8091

CNYZAR 2.0718

ZARJPY 7.6164

CHFZAR 14.3477

R186 8.34%

US 10 Year 2.08%

JSE -0.15%

FTSE 0.68%

S&P 500 0.40%

Gold 1 420.56 

Plat 863.62 

Plad 1 526.03 

Rhod 3 505.00 

Irid 1 470.00 

Ruth 251.00 

Copp 5 944.35 

Brent 63.14 

Gold ZAR 20 253.68 

Plat ZAR 12 312.99 

The rand this week weakened to above R14/$, mainly on the back of the announcement of an Eskom bailout and geopolitical events, and an analyst has warned it could breach R15/$ in the long term.

The local unit started its decline earlier this week, after Finance Minister Tito Mboweni on Tuesday tabled a special appropriations bill for Eskom to receive R59bn from government over the next two years. The currency declined by 0.6% to R13.94 at the time, Bloomberg reported.

Oil set for weekly gain as supplies drop, Iran tension persists

Saket Sundria and Grant Smith, Bloomberg 

Oil is set for a weekly increase as US crude stockpiles tighten and lingering tensions surrounding Iran stoke concerns that energy flows from the Middle East may be disrupted. Futures gained slightly in New York on Friday and are up 1.2% this week.

American crude inventories have declined for the past six weeks, the longest run since January 2018.

Iran tested a medium-range ballistic missile on Wednesday, according to a CNN report. European governments are seeking to assemble a naval mission to provide safe passage for ships through the Persian Gulf after a British tanker was seized by Iranian forces last week.

Naspers backs US education platform Brainly in investment push

Loni Prinsloo, Bloomberg

Naspers, soon to be one of Europe’s largest listed technology companies, is investing more of its $10-billion cash-pile in educational platforms.

The Cape Town-based company has led the latest $30 million investment round in Brainly, a US startup that allows learners to help each other with homework problems in different parts of the world.

The students earn points for the quality of their answers and can enter leadership-boards in different subjects such as history, mathematics and others.

“At Naspers, we back companies seeking to address big societal needs like education, helping them to achieve global scale,” said Naspers Ventures Chief Executive Officer Larry Illg. “Brainly has the potential to serve the needs of hundreds of millions of students around the world, and has shown strong growth in the US and high growth markets such as India, Indonesia, Turkey and Brazil.”

The cash from the current funding round will be used to update the platform and expand its base in the US, where it has already managed to make money from the service. Brainly is also expanding into India, where Naspers also led a $540 million funding round into another educational tech company Byju in December last year.

The Brainly platform is growing at around 200% a year. Before the Byju investment, Naspers’s education investments have all been in the US and includes other online learning platforms such as Udemy.

Naspers first invested in Brainly in 2016. Runa Capital and Manta Ray have also invested in the latest funding round.

A $32 million initial investment in Tencent Holdings, back in 2001, transformed the South African newspaper and Pay TV business into one of the largest technology investors globally. Its 31% stake in the Chinese game-maker is worth $140 billion, compared with its total market value of $110 billion in Johannesburg. The valuation gap motivated a decision for Naspers to list its internet businesses on the Euronext in September to close that discount.

* Fin24 is part of 24.com, a division of Media24, which is a subsidiary of Naspers.

Nationalising the Reserve Bank a 'R200 000 discussion' - Kganyago

Nationalising the stock held by the private shareholders in the SA Reserve Bank is a "R200 000 discussion", not a multibillion-rand question, according to the central bank's governor Lesetja Kganyago. 

Kganyago was speaking at the bank's annual general meeting in Pretoria on Friday. At the end of his opening address, the governor noted that private shareholders own a total of 2 million shares in the bank.

The highest dividend allowed by law is 10 cents a share, and only if the bank makes a profit. This means the bank can pay out R200 000 in dividends per year in total.

Europe stocks, US futures edge up

Cormac Mullen and Yakob Peterseil, Bloomberg

Stocks traded mixed on Friday as investors weighed the latest batch of corporate earnings and turned their eyes toward next week’s US Federal Reserve interest-rate decision. Treasuries edged higher.

The Stoxx Europe 600 Index was little changed, with media shares rising and retail firms struggling. US futures rose following a mixed bag of corporate results, as Amazon fell in extended trading after posting lower-than-forecast earnings and Alphabet rallied after exceeding revenue estimates.

Most Asian benchmarks were lower, though stocks in Shanghai bucked the trend. The dollar was steady ahead of US economic growth data due later on Friday, while the euro was little changed a day after fluctuating in the wake of the European Central Bank meeting.