- South African Stocks Lower as Zuma’s Exit Looms
South Africa’s stocks fell on Thursday as the continuing stalemate over President Jacob Zuma’s future prevailed.
The rand edged firmer but remained above the crucial 12.00 mark against the dollar future as demand capped, Reuters reported.
The fall in stocks was led by mining firm Gold Fields after the firm flagged lower earnings.
At 1440 GMT the rand was 0.04 per cent firmer at 12.0600 per dollar compared to an overnight close at 12.0650.
Early trading locally saw low volumes and the unit drifting around 12.10 before buying interest, as traders in London and later New York came online, spurred the currency towards resistance level around 12.02.
The unit this week has struggled to push beyond last week’s rally to 11.8500, a touch off its 2-1/2 year best, with optimism over the speedy removal of Zuma from office waning, leaving the currency open to profit-taking.
On Thursday leaked comments from ruling African National Congress’s Paul Mashatile revealed the party had been preparing to fire Zuma at the weekend, but a negotiated exit was now more likely as the incumbent dug in.
“As long as the optimism about a fresh start in politics does not fade the rand is likely to trend stronger against the dollar,” said analyst at Germany-based Commerzbank, Alexandra Bechtel, in a note.
Bonds weakened, with the yield for the benchmark government bond due in 2026 was up three basis points to 8.43 per cent.
The country’s dollar bonds fell across the curve on with the 2041 issue down 1.7 cents to a near two-month low as the political deadlock over Zuma’s future continued.
On the bourse, the benchmark Top-40 index fell 0.49 per cent to 49,935 points while the All-Share index lowered 0.44 per cent to 56,636 points.
“It was a big miss, they (the market) expected better results from Gold Fields,” said BP Bernstein trader, Vasili Girasis.
Gold Fields closed down 4.06 percent to 47.76 rand after falling more than five per cent in intra-day trade after the firm warned that profits could be down as much as 12 per cent.
Further losses came from the resource sector which came under pressure amid a stronger dollar, with Lonmin 3.95 percent lower to 11.20 rand and AngloGold Ashanti dropping 2.73 per cent to 121.15 rand.