SA’s rand rises after S&P leaves ratings unchanged

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South Africa’s rand sustained gains on Monday after Friday’s affirmation by S&P Global Ratings of the country’s sub-investment credit rating.

The rand was trading at 12.4525 to the dollar, up 0.4%. S&P kept South Africa’s investment grade rating at BB+ and the outlook as stable, saying that its fiscal position was still weak but that the economy would modestly improve in 2019.

“S&P has obviously stamped their approval in the belief that there can be a turnaround in the country’s discus if certain reforms are undertaken.

“We should see the rand strengthening.12.50 to 12.30 is not unlikely, said Cheslyn Francis, an analyst at Afrifocus Securities.”

On the bourse, stocks ended flat with Telkom and Tongaat Hullet among the biggest decliners after reporting weaker earnings.

But Arcelor Mittal’s South African unit surged after saying the sale of its stake in a Luxembourg-based JV would net $220 million.

The blue-chip JSE Top-40 index edged up 0.02% to 50.550 and the broader All-share index was off 0.1% at 56,857. Fixed-line phone group Telkom fell 3.6% after it cut dividends as it reported an 18% fall in annual profit.

Also weighed down by a dividend cut and decline in earnings, Tongaat lost 2.75%.

Elsewhere, Arcelor Mittal’s South African unit jumped 5.4% after the steel maker said it would sell its 50% in Macsteel to joint venture partner Machold for $220 million.

In fixed income, the yield for the government bond due in 2026 was down 1 basis point to 8.44%.