South African rand lifted by Brexit chaos, stocks inch up

JOHANNESBURG: South Africa's rand firmed for a third session in row on Thursday as local factors were overshadowed by offshore politics, with chaos around Britain's exit from the European Union boosting demand for emerging currencies.

Stocks were higher, buoyed by market heavyweight Naspers  and gold stocks.

At 1530 GMT the rand was 0.96 percent firmer at 14.2475 per dollar, stretching gains after opening trade at 14.3500, encouraged first by signs of a cool-off in the Sino-Washington trade spat, and then by political chaos in the U.K.

Against the British pound the rand soared to a 2-1/2 month best after Prime Minister Theresa May battled on Thursday to save a draft exit deal with the European Union after her Brexit secretary and other ministers quit in protest.

The rand traded 2.3 percent firmer against the pound at 18.2571 at 1530 GMT.

"The main move on the rand came after Theresa May's Brexit speech last night, and now we've come back a little from those highs," said trader Andre Botha of TreasuryOne.

U.K. lawmakers from the ruling and opposition parties on Thursday mostly rubbished the draft deal May agreed with the EU on Tuesday, sending the sterling and shares in British companies tumbling and breathing life into a sluggish emerging markets recovery.

"There was nothing in the local market and it's a little disconcerting," said Botha, adding that a parliamentary committee's recommendation for government to go ahead with amending the constitution to allow for land expropriation without compensation had little impact on the currency.

Bonds were weaker, with the yield on the government's 10-year paper up 1.5 basis points to 9.18 percent.

In equities, the All-Share index 0.28 percent firmer at 52,146 points while the Top 40 index was 0.27 percent weaker at 45,929 points.

"Volumes traded were quite light and everyone is waiting to see how the Brexit situation will play out," said Greg Davies, equities trader at Cratos Capital.

Naspers rose 2.67 percent to 2,783 rand after shares in Tencent, in which it has a 31 percent stake, closed 5.8 percent firmer after reporting above-forecast profit in the third quarter.

In resources, the gold index advanced 2.58 percent, as gold scaled a near one-week peak as investors sought cover from market turmoil caused by the Brexit deal.

Mediclinic however fell 5.18 percent to 63.19 rand, after its London-listed parent company Mediclinic International  reported an 8 percent decline in half-year core profit.