S.Africa's rand up on demand for bonds, stocks up

JOHANNESBURG: South Africa's rand relinquished some of its earlier gains against the dollar on Monday but was higher on the day, buoyed by foreign demand for high yielding local debt which helped offset lingering concerns over the global economy.

Stocks rose for a fourth day running, tracking a global rally, although gold producer Harmony dropped after its quarterly profit missed forecasts.

The JSE Top-40 index of blue-chips gained 1.21 percent to 26,947.78 and the broader All-share index lost 1.12 percent 30,159.42.

Foreigners bought a net 1.2 billion rand of South African bonds last week, data from the JSE exchange showed, and demand remained strong on Monday, pushing the yield on the four-year note 7.5 basis points lower to 6.935 percent.

The yield for 2026 issue fell 4.5 basis points to 8.33 percent.

By 1542 GMT the rand traded at 7.1195 to the greenback, off a session high of 7.09 but 0.77 percent stronger than Friday's close.

"We saw quite a lot of local asset managers buying dollars today but there was a lot of supply coming from offshore ... mostly bond-buying," Standard Bank trader Warrick Butler said.

Traders said the key levels for the rand for the week ahead were 7.10 and 7.20, which had offered resistance and support for the currency respectively over the last two trading days.

Platinum miners were among the top gainers on the bourse as the price of the white metal rose above that of gold after trading at a discount for the first time in more than two years last week.

Impala Platinum jumped 2.18 percent to 172.76 rand and rival Lonmin was up 2.46 percent to 139.35 rand.

Elsewhere, industrial conglomerate Bidvest , which is exploring the sale of its biggest unit in a deal analysts say could be worth $4 billion, rose 3.88 percent to 156.17 rand.

"We saw some really encouraging economic data in the past couple of sessions and that has been a catalyst for the guys to pull some of these stocks out of oversold levels," one Johannesburg-based trader said.

Harmony was among a few stocks that bucked the upward trend, falling 4.66 percent to 94.39 rand after its fourth-quarter results missed estimates.

Kumba Iron Ore gave up 5.27 percent to 464 rand as the deadline passed for investors to receive its latest dividend payout.

Markets largely shrugged off a wage strike by more than 200,000 municipal workers, intensifying the labour strife that has rocked Africa's biggest economy.

"People don't look at that as the cause to disinvest or invest, they look at the overall picture. At the moment the country -- despite the small woes that we have -- has a lot rosier picture than a lot of the developed markets," Standard Bank's Butler said.

Disciplined fiscal policies have helped South Africa weather turmoil in the global economy, Finance Minister Pravin Gordhan told an auditors conference on Monday, adding the traditional perception of emerging markets as a risky investment destination was slowly changing.

Copyright Reuters, 2011