Rand, JSE rally as Malema confirms it’s a boy


Rand, JSE rally as Malema confirms it’s a boy

Published Date: 2017-12-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

Rand, JSE rally as Malema confirms it’s a boy

The rand pre-empted a Ramaphosa win, rallying more than 3%

Delays and recounts meant the markets had long closed by the time the official results of the ANC leadership election were released but the markets continued pricing in a win for Cyril Ramaphosa, with the rand, banks and retailers the big winners. EFF Commander in Chief Julius Malema helped spur the excitement on, declaring "it's a boy" while everyone else was glued to their twitter feeds.

The currency gained 4% against the dollar yesterday, crossing below R13/$, and strengthened by more than 3% against the euro and the pound. While the rand's strength was bad for resource and other rand-hedge shares on the JSE, sending Naspers and Richemont both 2% lower and British American Tobacco 1.5% weaker, SA Inc. shares benefited from perceptions that Ramaphosa could change the country's economic trajectory. The JSE's Banks Index surged 5.2% and the Financial 15 closed 4% higher, led by a 6.9% gain in FirstRand's share price. Interest-rate sensitive general retailers added 4.1%. The Foschini Group jumped 5.5% and Truworths ended 3.7% higher.

With the rand continuing to rally after the market closed, expect more weakness in rand hedges today. But before you get too excited, JPMorgan and Credit Agricole have cautioned that Ramphosa is no magic bullet for South Africa and formidable challenges could limit progress.

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