JSE rockets on strong risk-on sentiment as Ramaphosa replaces Zuma
The JSE surged on Thursday, closing at a three-week high on strong risk-on sentiment, following the election of Cyril Ramaphosa as President, the day after Jacob Zuma finally quit.
Risk-on trade dominated the market for most of the day, with banks the biggest beneficiaries. At one stage, in midday trade, the all share had jumped more than 4%, its biggest one-day gain in three years.
Blue-chip stocks were sharply higher, with Bidvest gaining nearly 10% and Naspers 7%. Despite some property stocks gaining strongly, the property index struggled for most of the day, closing lower. Resilient lost 10% as the property group and other companies in its stable fell victim to a renewed sell-off.
The rand reached a three-year best level of R11.5997 to the dollar before softening towards the JSE’s close.
Zuma’s departure offered a new opportunity under a Ramaphosa administration to correct Zuma’s economic blunders, analysts said. "With the positive moves over the past few days, and the strong market reaction, the economy is likely to recover more quickly," Nedbank chief economist Dennis Dykes said in a note.
He said the country breathed a massive sigh of relief, as Zuma left behind a disastrous legacy. "The firmer rand has improved the inflation outlook considerably, with possible interest-rate cuts set to help growth pick up momentum."
The hope is that ratings agency Moody’s will hold off from further downgrading SA’s credit rating for the time being. In a statement on Thursday, Moody’s said it was monitoring developments. S&P Global Ratings was also circumspect in its comments, saying Ramaphosa and his administration would require time to design and implement measures to improve economic growth and stabilise public finances.
The JSE was also supported by global markets, with European stocks up on higher growth prospects in the eurozone. The Dow opened 0.8% higher, with the US market set to close up for a fifth consecutive trading day.
The improvement in global stocks came even as US benchmark government bond yields — specifically the US 10-year note — rose to a fresh four-year high, above 2.90%.
The all share closed 3.72% higher at 59,533.10 points, the highest daily percentage gain since December 2014, while the top 40 gained 3.97%. Banks rose 5.78%, the platinum index 4.35%, general retailers 4.17%, industrials 3.97%, financials 3.72% and resources 3.14%. Property shed 0.13%.
BHP rose 4.13% to R264.19 and Anglo American 2.2% to R283.23. Bidvest leapt 9.12% to R250.90 and Imperial Holdings 9.71% to R282.50.
Impala Platinum added 5.07% to R32.15 and Anglo American Platinum 3.4% to R338.24.
Barclays Africa jumped 7.78% to R205.75, Nedbank 5.37% to R290.83, FirstRand 6.43% to R75.35 and Standard Bank 5.13% to R218.60. Discovery raced up 9.13% to R180.10 and Sanlam 7.26% to R96.
Woolworths surged 5.18% to R67, TFG 6.01% to R219.46 and Shoprite 3.36% to a record close of R260.91.
Resilient was down 11.72% to R84.75, Greenbay 12.1% to R1.38, Fortress B 7.27% to R20.40 and Nepi Rockcastle 4.12% to R119.50. Growthpoint added 3.55% to R29.50 and Hyprop 3.69% to R111.99.
Naspers closed 6.98% higher at R3,391.40. Famous Brands rose 4.49% to R114.94.