Rand reacts badly to Cyril Ramaphosa’s land talk, ahead of S&P rating verdict
The rand reacted badly to President Cyril Ramaphosa affirming the ANC’s expropriation without compensation policy on Friday, swinging from R12.51 to R12.82 to the dollar.
Ramaphosa made his statement that "we are going to take land and when we take land we are going to take it without compensation" a week before S&P Global Ratings is scheduled to give its latest verdict on SA’s sovereign credit rating.
S&P cut South African rand-denominated debt to its first tier of junk status, BB+, in November 2017.
Populist rhetoric from Ramaphosa ahead of the 2019 national election raises the fear that the credit ratings agency will lower its outlook on SA from stable to negative when it releases is new report on the country on May 25.
The rand was trading at R12.78 to the dollar, R15.01 to the euro and R17.16 to the pound at 7am on Monday morning.
Monday is a busy day on the JSE results front, with Barloworld, Pioneer Foods, Reinet and several property companies scheduled to release results.
Barloworld said on May 8 it expected to report headline earnings per share (HEPS) for the six months to end-March grew by up to 35%.
Closing General Motors (GM) dealerships following the US car maker’s divestment from SA, and also some BMW dealerships, hurt revenue from Barloworld’s automotive division.
But its car dealerships’ operating profit and margin improved, the group said.
"Equipment Southern Africa’s operating performance has shown a steady improvement in the first half of the 2018 financial year supported by favourable global commodity prices and increased mining activity," the trading statement said.
"This also assisted our joint venture in the Katanga province of the Democratic Republic of Congo to deliver strongly improved earnings for the period.
"Equipment Russia has continued to benefit from greenfield and brownfield mining projects, as well as a recovery in commodity prices, in particular the coal sector, mining projects and produced record dollar revenue and operating profit for the first six months of the 2018 financial year."
Pioneer Foods also flagged HEPS growth of up to 35% for the six months to end-March, in a trading statement on April 19.
Pioneer said the volume of food it sold increased, but lower prices resulted in its interim sales declining 2.8% to R9.9bn.
It said its fruit exports suffered from a strong rand.
Statistics SA is scheduled to release March’s tourist accommodation report at 10am, land transport at 11.30am, and food and beverages sales at 1pm.