S.Africa stocks, rand surge on central banks move

An electronic board displaying movements in major indices at the Johannesburg stock exchange in Sandton September 23, 2008.

By Tiisetso Motsoeneng
JOHANNESBURG  - South African stocks surged more 4 percent on Wednesday, as coordinated efforts by major central banks to provide liquidity to the global financial system sent Johannesburg's benchmark index to its biggest one-day gain in more than 18 months.
The central banks of the United States, Europe, Japan, Canada, Britain and Switzerland announced a global action to provide liquidity to the financial system, lowering the price on existing dollar swaps.
"Markets are on the charge at the moment. We are seeing credible steps by central banks to address this crisis and that has given the bulls a reason to cheer," said Devin Shutte, a trader at Newstrading..
The JSE Top-40 index jumped 4.14 percent to 29,429.88, the highest closing level since Oct 31 and the biggest one-day gain since May 10, 2010. The broader All-share index added 3.72 percent to 32,812.64.
Mining firms were among the biggest gainers, also helped by China's move to cut the reserve requirement ratio for its banks the first time in nearly three years, a measure that could help ease a slowdown in the world biggest commodity consumer.
African Rainbow Minerals, which mines coal and platinum group metals, rallied 6.91 percent to 47.48 rand, while
Impala Platinum, the world's second-largest producer of the previous metal, surged 5.77 percent to 171.61 rand.
Coal and iron ore miner Exxaro Resources was 5.76 percent stronger at 179.79 rand.
The move by the central banks also boosted metal prices with copper rising to a two-week high while bullion added more than 2 percent.
Sasol gained 5.01 percent to 389.13 rand. Separately, the synthetic fuels maker said it was in talks to divest from its operations in Iran.
Pick n Pay added 3.37 percent to 43.57 rand, helped by news that an Australian court has ruled in its favour in the sale of its unit in that country.
Among decliners, Pioneer Foods fell 2.72 percent to 56.48 rand and budget hotels operator City Lodge lost 1.54 percent to 68.48 rand.
Volumes declined slightly to 322 million from 3.77 million in a session where advancers outpaced decliners by 220 to 54, according the preliminary data from the JSE.
The rand rose as much as 2.8 percent against the dollar, to its strongest in two weeks. Government bonds rallied sharply, in line with the stronger euro.
The rand was at 8.13 against the dollar by 1342 GMT after jumping to 8.1180 earlier. The yield on the four year bond tumbled 19.5 basis points to 6.78 percent while that for the longer dated 2026 paper fell 18 basis points to 8.49 percent.
"Because central banks have decided to add liquidity that's propped up everything," said Ion de Vleeschauwer, chief dealer at Bidvest Bank.
"The euro is up so that's why the rand is up. But I don't think it's going to last."