September 10, 2016 / 7:37 AM / 3 years ago

South Africa's rand tumbles on global risk aversion, blue chips lift stocks

JOHANNESBURG (Reuters) - South Africa’s rand slumped as much as 2 percent against the dollar on Friday, as global concerns following North Korea’s nuclear test compounded domestic political uncertainty, sending investors fleeing to safe haven assets.

South African rand notes in a file photo. REUTERS/Siphiwe Sibeko

Stocks however snapped two sessions of losses, lifted by companies with sales outside South Africa which stand to benefit from the weaker currency.

The rand stumbled to 14.4500 to the dollar during Friday trade, its softest in a week, and was trading at 14.3700 by 1530 GMT, a 1.6 percent decline from Thursday’s New York close.

It tracked other emerging market currencies which fell partly on news that North Korea had conducted its fifth nuclear test.

“If there’s a serious threat to geo-political stability we are likely to see risk-off trading, and the rand being one of the most liquid in terms of emerging market currencies will be affected,” ETM market analyst Ricardo Da Camara said.

Government bonds were also weaker, with the yield on the 2026 benchmark issue climbing 16 basis points to 8.755 percent.

The rand’s woes were compounded by continuing domestic concerns around an investigation into Finance Minister Pravin Gordhan over the activities of a surveillance unit set up under his watch, which police say spied on politicians.

Gordhan questioned on Thursday the motive of the inquiry, saying it had no basis.

Opposition parties have called it a witch-hunt and a veiled attack on the independence of the Treasury.

On the stock market, most blue chips closed in the black.

Shares in Mediclinic, which also has operations in the United Arab Emirates and Switzerland, gained 2.5 percent to 185.94 rand after it said trading was in line with expectations.

Mediclinic’s foreign earnings made it attractive to investors, Sanlam Private Wealth director Greg Katzenellenbogen said. “Resource stocks were also up on the weaker currency,” he said.

BHP Billiton, which has a secondary listing in Johannesburg, was the best blue chip performer, gaining 2.7 percent to 193.89 rand.

The benchmark Top-40 index closed 0.3 percent firmer at 46,735 points while the All-Share index was up 0.2 percent at 53,347 points.

Trading volumes were slightly below par, with around 286 million shares changing hands, compared with last year’s daily average of 296 million, according to preliminary bourse data.

Reporting by Stella Mapenzauswa and TJ Strydom; Editing by David Stamp

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