JOHANNESBURG - South Africa’s rand tumbled more than 1% while stocks plunged to a two-month low as a sharp rise coronavirus cases overseas combined with concerns about the upcoming budget speech knocked down local assets.
Local bonds trade at a favourable differential, or carry trade, to those of developed countries offering zero or negative yields, largely due to low inflation and high lending rates. Bianca Botes, an analyst at Peregrine Treasury, said the toll on global growth of the virus outbreak was likely to be larger than initial forecasts, pushing investors out of emerging markets even as they were still on the hunt for yields.
Miners Amplats, AngloGold Ashanti and Impala Platinum all fell more than 8% as the virus-related risk-off mood paired with a pullback in global platinum and palladium prices.
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