January 14, 2020 / 3:54 PM / 13 days ago

South Africa rand slips as Woolworths, Old Mutual lead stocks higher

JOHANNESBURG, Jan 14 (Reuters) - South Africa’s rand slumped to a one month-low on Tuesday, as data pointed to continued weakness in the economy, while a surge in Woolworths Holdings and Old Mutual led stocks higher.

A survey showed consumer confidence in Africa’s most industrialised economy remained at a near-two year low in the fourth quarter, as the country struggles with prolonged power cuts and choppy economic growth.

The rand tumbled more than half a percent to hit a session low of 14.5000 per dollar, its weakest since Dec. 16. The unit trimmed its losses in late afternoon trade to steady at 14.4000 as of 1535 GMT.

The focus now turns to the South African Reserve Bank’s monetary policy meeting on Thursday, when it will announce its interest rate decision after keeping rates on hold at 6.5% at its last meeting.

November retail sales figures are due on Wednesday and mining production data on Thursday.

“With the country’s inflation rate dropping to its lowest level in almost nine years at 3.6% and economic data over the past few weeks painting a gloomy picture, the South African Reserve Bank may cut interest rates this quarter,” said Lukman Otunuga, senior research analyst at FXTM.

The Johannesburg All-Share index and Top-40 index registered near one-month highs as department chain Woolworths and insurer Old Mutual posted strong gains.

Also helping the equity market was optimism around the Phase 1 Sino-U.S. trade agreement expected to be signed this week.

Woolworths gained 8.30% after it said it appointed Levi Strauss executive Roy Bagattini as CEO, cheering investors keen for a fresh pair of hands to tackle the department chain’s struggling Australian business.

Investors often said that CEO Ian Moir overpaid for upmarket Australian department chain David Jones “and when it wasn’t working he continued to invest in it”, Sasfin Wealth senior equity analyst Alec Abraham said.

“You’ve got fresh eyes with no vested interest in any particular region or business that can arguably have an objective review of the business and make objective decisions on where it should be going in future,” he said.

Old Mutual rose 3.25% to 19.69 rand after a South African High Court ruled that the insurer does not have to reinstate its sacked chief executive, Peter Moyo, a shift in legal fortunes for the country’s No.2 insurer.

The All-Share Index closed 0.69% firmer at 57,967 points, while the Top-40 index gained 0.74% to 51,725 points, both levels last seen on Dec. 19.

In fixed income, the yield on the benchmark government bond due in 2026 was up 3.5 basis points at 8.26%. (Reporting by Olivia Kumwenda-Mtambo and Nqobile Dludla; editing by Nick Macfie)

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