September 12, 2019 / 4:09 PM / 2 months ago

UPDATE 1-S.Africa's rand firms on ECB decision, trade hopes, stocks gain

(Updates prices, adds stocks)

JOHANNESBURG, Sept 12 (Reuters) - South Africa’s rand rallied in afternoon trade on Thursday as the European Central Bank’s new stimulus measures and mutual concessions by the United States and China in their trade dispute buoyed risk appetite, while stocks also gained.

At 1530 GMT, the rand was 0.55% firmer at 14.5900 per dollar.

“It’s just a bout of risk on. Because the ECB cut their rates, it makes South Africa look like a more valued destination in terms of yield-seeking for other investors. I think the rand will enjoy this,” Andre Botha, senior dealer at TreasuryOne, said.

The ECB cut rates deeper into negative territory and restarted its programme of bond buying, known as quantitative easing, with a formulation that suggests purchases could go on for years.

The ECB news further buoyed riskier bets, already boosted by signs of detente in the U.S.-China trade war.

In mutual concessions, U.S. President Donald Trump had moved to delay an increase in tariffs on Chinese goods by two weeks, while China exempted some U.S. drugs and other goods from tariffs.

In equities, stocks jumped to a more than one-month high, with the Johannesburg All-share index was up 0.96% to 56,782 points, and the blue chips Top-40 index was 0.81% firmer to 50,769 points.

Leading stocks was South African drugmaker Aspen Pharmacare Holdings Ltd, which gained 10.97% to 94.25 rand after it lowered its full-year debt, which had concerned investors as levels moved close to breaching debt covenants.

“The one thing that came out in their financial results, which the market took quite favourably, they cut their dividends to zero. The market actually does like it because it’s paying back the debt, meaning less of a debt burden for the company,” said Wayne McCurrie, FNB private wealth portfolio manager.

Resources also gained with the platinum index up 5.76%, benefiting from high prices. Platinum producer Impala Platinum Holdings Ltd gained 6.37% to 90 rand, while Anglo American Platinum Ltd rose 5.72% to 897.05 rand.

Bucking the trend was Naspers spin-off Prosus which declined 2.88% to 1,168 rand a day after it made its Johannesburg Stock Exchange debut.

Bonds firmed, with the yield on the benchmark instrument due in 2026 falling 5.5 basis points to 8.105%. (Reporting by Olivia Kumwenda-Mtambo and Onke Ngcuka; Editing by Lisa Shumaker)

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