* Rand brushes off land reform worries ahead of FED
* Stocks marginally weaker (Adds latest prices, analyst comments)
JOHANNESBURG, Aug 1 (Reuters) - South Africa’s rand bounced back late on Wednesday as investors bought the currency cheap ahead of a policy decision by the U.S. central bank that could send the greenback higher.
Stocks were led slightly lower by banks.
At 1520 GMT the rand was 0.66 percent firmer at 13.1900 per dollar, compared to an overnight slump to a one-week low of near 13.40 after President Cyril Ramaphosa said the ruling party would press ahead with amending the constitution to speed-up land reform.
“The land expropriation issue has largely been priced-in, especially as the rhetoric is being dialled up,” said Halen Bothma of ETM Analytics.
South African assets were rattled by the news with the rand sliding about two percent, bond yields rising and the cost to insure against a credit default also climbing.
Christopher Shiells, a senior emerging market analyst at London-based Informa Global Markets, said the threat to property rights would further dent investor sentiment, specifically foreigner investors as it created a big risk and hurdle to get over.
“I think it is a move to just clarify the constitution, which it has been argued already allowed for the seizure of land without compensation,” Shiells said.
The effect however did not last into the session and the rand gained momentum, helped by positive manufacturing activity and some short-positioning ahead of the conclusion of the U.S. Federal Reserve’s policy meeting later in the evening.
Bonds ended the day weaker, with the yield on the benchmark paper due in 2026 adding one basis point to 8.62 percent.
On the bourse, shares closed slightly weaker after being led lower for most of the day by banks on the back of Ramphosa’s announcement of the ruling party’s intention to amend the constitution to allow for expropriation of land without compensation.
The All-share index was down 0.06 percent to 57 399 points while the top 40 index was down 0.07 percent to 51 276 points.
The banking index was down as much as 1.1 percent on the day but ended the session 0.6 percent lower.
“The performance of the banking stocks is part and parcel of what happened last night. It is a knee-jerk reaction and the market has digested what was said. Surprisingly, we have remained pretty resilient. The market has not reacted as badly as commentators thought,” said Ryan Woods, trader at Independent Securities.
ArcelorMittal’s South Africa unit bucked the trend after reporting a swing back to a modest profit in the first half of the financial year, boosted by higher steel prices and upbeat sale volumes.
Shares in the steelmaker rose 14.38 percent. (Reporting by Mfuneko Toyana and Patricia Aruo, Editing by William Maclean)