Trade of the Month: FTSE-JSE Financials Index vs rand/dollar
Uncertainty continues as international investors remain wary because of the issue of land expropriation without compensation
During the course of this month global markets experienced some turmoil. The US market has pulled back from record highs, breaking the uptrend that has been in place for most of the year. This leads to a flight to safety, and safe-haven assets are likely to come into favour. This means the rand should continue to be fragile, so trading a long position on the USD/ZAR currency pair seems like a fairly safe play. You can choose to either trade it by buying an ETN, like the NewWave USD Exchange Traded Note, or you can buy a USD/ZAR currency future or a contract for difference (CFD). The lower-risk option would be to buy the ETN as there is no gearing on the instrument. The view that the rand will remain weak in the medium term is backed by a number of different catalysts. First, there is the remaining uncertainty around exactly how the government wants to implement land expropriation without compensation. This is a deterrent to international investors as they are not certain what the im...
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