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#RandReport: Resource shares lead bourse lower rand weakens

The rand relinquished earlier gains against the dollar, breaching the psychologically key 14.0000 mark.

FILE: Peer Anglo American was down nearly 10 percent at 118.18 rand on weak demand for its iron ore and platinum. Picture: EWN.

JOHANNESBURG - South Africa's bourse slid nearly 2 percent on Monday, with resource stocks taking a pounding as investors fretted about the impact of sluggish Chinese growth.

The rand relinquished earlier gains against the dollar, breaching the psychologically key 14.0000 mark for the third session since late August as risk aversion took hold, while government bonds also weakened.

Shares in Glencore plunged 26.44 percent to 15.41 rand as commodity prices wilted and concerns mounted over the diversified mining firm's debt burden.

Peer Anglo American was down nearly 10 percent at 118.18 rand on weak demand for its iron ore and platinum.

"There is a lot of nervousness about what will happen to growth in China," said Ryan Woods, a trader at Independent Securities. "There is a general risk-off attitude and emerging markets tend to feel it more."

The Johannesburg Stock Exchange's Top-40 index fell 1.6 percent to 44,242 points and the broader All-share index lost 1.7 percent to 49,491 points.

SABMiller bucked the trend and closed 3.08 percent higher at 776.68 rand after reports that Anheuser-Busch Inbev could be willing to pay a premium for the maker of Peroni in what could be the industry's largest ever takeover.

On the foreign exchange market, the rand swung from a session high of 13.8005 to the dollar to 14.0725 at the other end, not too far off last week's all time low of 14.0860.

By 1543 GMT the local unit was down 0.54 percent at 13.9800 to the greenback compared with Friday's close.

Government bonds followed suit, with the yield for debt due in 2026 climbing 6.5 basis points to 8.56 percent.

The rand is down nearly 21 percent against the dollar this year, partly dragged down by prospects of interest rates hikes by the US Federal Reserve which have reduced investors' appetite for riskier emerging markets.

South Africa is particularly vulnerable as it nurses chronic deficits on both its budget and current account balance.

"Threats of Fed policy rate normalisation and slowdown fears out of China have been the main catalysts for the risk-off trading environment," Barclays Africa analyst Mike Keenan said.

"South Africa still has relatively large external funding requirements, which is why ... waning portfolio flows remain a concern for both the country's balance of payments and its exchange rate outlook."