Stage 6 load shedding weighs on the rand and JSE

South Africa’s rand and JSE were trading weaker on Tuesday morning, weighed down partly by Stage 6 load shedding locally and a stronger dollar on the international front.

More intense rolling power cuts resurfaced on Tuesday, with Eskom hit by further plant breakdowns. The rand and JSE weakened by almost 1% at one point, with the rand hitting R19.26 against the greenback while the JSE was at 74643 points.

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The JSE closed marginally up (0.4%) at 75 375 points on Monday.

Simon Brown, founder of Just One Lap and host of MoneywebNOW said the biggest driver behind the rand’s slip was the dollar strengthening.

“We’ve been seeing some rand weakness, and that primarily is probably being driven by dollar strength. We’re seeing the dollar strong against the euro, sterling and pretty much across the basket of emerging market currencies,” he added.

State-owned power utility Eskom this week reimplemented higher stages of load shedding, announcing the highest Stage 6 power cuts until further notice as of Tuesday morning, following a protracted period of lighter load shedding even during the Brics Summit in SA recently.

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“The sort of bigger picture would be locally, where we’re now sitting here on Stage 6, and I think that’s spooking folks again,” said Brown.

“And what we’re not seeing is… foreigners buying in both our equities and bond markets; that’s also diminished over the last two to three, to four years, which simply means less money coming in,” he added.

Vulnerable position

He said with commodities retreating, unlike in the lead-up to 2021 when a commodity boom helped to shelter the rand, the currency is left in a very vulnerable position.

The JSE All Share index (Alsi) fall on Tuesday morning was dragged down by some heavyweights like Prosus, Naspers and Richemont.

Meanwhile, investors also had the latest SA GDP figure to decipher locally. Official GDP data from Stats SA for the quarter ended June 2023 showed that the economy expanded 0.6%, compared to the prior quarter’s growth of 0.4%. The print came in higher than expectations of market watchers.

Read: GDP: Second-quarter growth beats forecasts

“Markets have got used to South Africa’s GDP being a bit of a horror show, it’s not what’s needed,” Brown said.