South Africa’s markets showed little reaction to finance minister Pravin Gordhan’s budget on Wednesday (22 February), with the rand\u00a0holding onto earlier gains to trade 0.35% higher at R13.09 to the dollar following the conclusion of the speech.<\/p>\n
On Thursday morning, the rand strengthened further to R12.98 against the dollar.<\/p>\n
Despite little concern shown by the market, the all share did close slightly weaker on the day,\u00a0with the blue-chip JSE Top-40 index closing 1.06% lower at 45,073 and the broader All-share index index down 0.95% at 52,088.<\/p>\n
This is likely due to the continued pressure faced by\u00a0mining shares, following\u00a0faltering commodity prices with AngloGold Ashanti topping the decliners list on the benchmark index.\u00a0AngloGold Ashanti dropped 4.3% to 160.20 rand, weighed down by a ‘sell” rating downgrade from several brokers that include those at Citigroup and stalling momentum in the price of gold.<\/p>\n
Bond yields showed the biggest spike on Wednesday before easing back after Gordhan announced he would be targeting the wealthy with tax hikes. The benchmark 2016 issue bond softened while Gordhan spoke, with the yield rising 6 basis points at one point ti 8.79% on the back of changes to how property purchases will be taxed.<\/p>\n
Analysts at Seeff property group say that while a raised threshold of transfer duty exemption as announced in the\u00a0Budget 2017, is most welcome for the property market, a new tax bracket for the rich is not.<\/p>\n
\u201cWe always knew that this was a budget that was set to bring a higher tax burden, especially for the wealthy and tougher times for consumers on the whole as Treasury needed to find an extra R28 billion in a shrinking economy, said Samuel Seeff, chairman of the Seeff property group.<\/p>\n
This was reiterated by\u00a0Razia Khan, Standard Chartered Bank’s Chief Africa Economist, speaking to Reuters<\/a><\/strong>. “While borrowing requirements are not substantially changed, the overall mix of measures, even with further attempts to cut spending, will do very little to boost confidence,” she said.<\/p>\n Elsewhere, Murray & Roberts was flat at 15 rand after Germany’s ATM Holding said it had bought 25 percent stake in the construction firm, igniting speculation that it might looking for a tie-up with the South African company.<\/p>\n Several local companies are also expected to be in the spotlight this week according to FNB\u00a0Investment Analyst, Chantal Marx with big names including Aveng, Imperial, Shoprite,\u00a0Adcock Ingram,\u00a0RCL Foods, Spur,\u00a0Liberty Holdings,\u00a0Barclays Africa and the\u00a0Discovery Group all\u00a0releasing results.<\/p>\n
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