MARKET WRAP: Rand drops after S&P cuts SA rating to junk
Ratings agency sends out a stark warning to government to get its house in order
The rand fell 27c to the dollar within minutes of the announcement on Friday that S&P Global had downgraded the country’s local currency debt to subinvestment grade.
The ratings agency sent out a stark warning to government to get its house in order, with state-owned companies the biggest contributor to the downgrade.
Moody’s, which also released the result of its latest review on Friday, did not alter the country’s rating but placed it on review for a downgrade, which will probably come in February after the budget speech.
Moody’s said that if the February budget didn’t return the country to a path of fiscal consolidation, a downgrade was likely. “It remains unclear what assurance should be taken from the government's stated commitment to reduce the funding gap.” It said, however, it recognised that fiscal consolidation would be increasingly challenging without revived growth.
At 12.32am on Saturday the rand was at R14.15 to the dollar from Thursday’s R13.88.
The JSE all share was little changed in mixed trade on Friday, as banks and financials retreated after the Reserve Bank kept interest rates unchanged on Thursday.
Miners were higher, with the gold price was flat at $1,288.69, but the platinum price rose 0.4% to $940.8 an ounce.
Retailers rallied on Black Friday, while the property index ended the day marginally lower.
The all share closed 0.04% up at 60,324 points and the blue-chip top 40 ended the day flat. The platinum index rose 2.3%, general retailers 0.87%, resources 0.66%, and the gold index 0.62%. Banks shed 1.12%, financials 0.57%, and property 0.18%.
The all-share index ended the week 0.33% higher, its eighth consecutive week of gains. The index has added 19.09% so far this year.
Impala Platinum continued its winning streak, as former Zimbabwean vice-president, Emmerson Mnangagwa, was sworn in as the country’s President. Implats, which has mining interests in Zimbabwe, gained 5.88% to R45, bringing total gains for the week to 21.1%.
Woolworths stood out in the retail sector, jumping 4.18% to R57.57, in what has been a torrid few months for the blue-chip retailer. It is 18.9% lower for the year.
Liberty Holdings ended the day 1.07% higher at R115. It said earlier that long-term insurance new business grew by 6% in the nine-month period to end-September.
Standard Bank gave up 1.4% to R168.30 and Barclays Africa 1.3% to R151.30.
The top-40 Alsi futures index lost 0.11% to 54,371 points.