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South African Stocks Fall as FirstRand, Absa Drag Banks Lower

South African Stocks Fall as FirstRand, Absa Drag Banks Lower

South Africa’s main stock index halts two-day advance falls 0.6% by 10:04 a.m. in Johannesburg after declines following trading statements from FirstRand Ltd. and Absa Group Ltd. counter gains from a stronger rand, pulling banks lower, and as index heavyweights Naspers Ltd. and BHP Group Plc fall.

Rand strengthens for a third day, buoyed by news that the country is preparing to ease Covid-19 lockdown restrictions.

“The stalemate in the U.S. around a stimulus package took the shine off the dollar,” said Matete Thulare, a Johannesburg-based analyst at Rand Merchant Bank, in a note to clients. “Also helping the rand stronger was the news that President Ramaphosa is preparing to ease lockdown restrictions, although details still remain sketchy.”

Weakness in Johannesburg stocks comes as the global equities rally shows signs of fatigue, with markets in Asia and Europe declining.

  • Index of bank stocks fails to get a boost from the stronger rand to fall 3% to a one-week low, after trading statements from FirstRand and Absa damp sentiment
    • FirstRand falls for a second day, down 2.8% after the bank said it sees earnings declining as much as 45% on the back of higher-than-expected credit losses and impairment charges
      • NOTE: FirstRand Sees Annual Profit Down as Much as 45% on Impairments
    • Absa -6% after the bank says it sees earnings declining as much as 85% in the first half after the country’s lockdown weighed on the economy and record low interest rates cut lending income.
      • NOTE: Absa Sees First-Half Profit Falling as Much as 85% on Virus
    • Standard Bank Group Ltd. -1.9%, Nedbank Group Ltd. -3.8%, Investec Plc -0.2%
  • Naspers, with a 18% weighing on the index, retreats 1.4% to provide biggest drag on the market, as partly owned internet giant Tencent Holdings Ltd. falls in Hong Kong after telling investors that the U.S. ban on its WeChat messaging service would only have a modest impact on the world’s largest gaming corporation.
  • Iron ore producers and gold miners drag gauge for mining stocks down 0.6%
    • NOTE: FERROUS: Iron Ore Retreats With Brazilian Shipments Seen Strong
    • BHP -1.1%, as company faces a call from some investors to put a moratorium on any mining activity that threatens indigenous cultural heritage sites in Australia until laws are strengthened.
    • Anglo American Plc -1%, AngloGold Ashanti Ltd. -0.9%, Gold Fields Ltd. -0.8%, Impala Platinum Holdings Ltd -0.6%, Glencore Plc -2.1%, Harmony Gold Mining Co. -0.5%
  • Foreigners were net sellers of South African stocks Wednesday, disposing of 3.05b rand worth of shares, according to index operator JSE Ltd.

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