According to a report published on IOL, shares of South African companies and other markets remained to be affected by the passing of former president and political champion Nelson Mandela. Moreover, broader emerging shares were said to have retained its pace as traders waited for the payroll data to be released by the US late Friday.
Mandela was a beloved symbol of political compromise and racial reconciliation not only to South Africa, but to the rest of the world. The former president died of a recurring lung illness late Thursday. On the other hand, the report said simmering social tensions in the African country might threaten the largest economy in Africa.
According to Markit, the amount needed to insure against a South African default was at 217 basis points, a four basis points drop in the five-year credit default swap market. The main stock index of Johannesburg jumped half a point while the rand had edged off the four and a half year lows recorded on Thursday.
RBS emerging markets strategist Abbas Ameli-Renani said, "We have seen a bit of rand weakness, but it doesn't have much to do with Mandela's death. We have a bit of general emerging market weakness this morning, there is a bit of squaring of positions ahead of payrolls."
Africa, like other emerging markets, are awaiting for the release of the non-farm payroll data by the US in order to obtain a hint on the US economy's strength. Worries over the tapering of the monetary stimulus package by the US Federal Reserve Bank had resulted to a barrage of investments in emerging markets. Indicators showed that the markets, including in Africa, show a robust economy, IOL said in its report.
Analysts said equity outflows in merging markets, based on data from fund tracker EPFR, were seen for six successive weeks.
Join the Conversation