The initial market reaction is always a knee-jerk indicator of a South African budget’s reception with investors – read capital – and the initial reception was positive.
The rand immediately rallied against the dollar after the minister began speaking, rising to 18.13/dlr from 18.29 previously. It then pared those gains to 18.20/dlr about an hour later, but it was a marked contrast with PresidentMeanwhile, the yield on the 10-year government bond fell 11 basis points to 10.185% from the 10.295% it was fetching around the time the minister began speaking.
And the JSE — which is not, it must be said, as sensitive to budget speeches — reversed its earlier losses. The JSE’s all-share index was down 0.60% about an hour after the minister started speaking compared to being 1.0% lower earlier. “The budget did provide what markets are looking for, the government has absorbed a substantial portion of Eskom’s debt. Of course, it does push up the government debt to GDP ratio, to 73.6% from the previous 71.1% peak, but it seemed to be largely credit neutral.
Where is the money coming from….?
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