South African rand, stocks fall on Fed taper expectations

JOHANNESBURG (Reuters) -South Africa's rand fell to its weakest in more than five months and stocks sank nearly 3% to their lowest in close to a month on Thursday as expectations the U.S. Federal Reserve will start tapering its huge stimulus this year dented sentiment worldwide.

At 1500 GMT, the rand traded at 15.1550 against the dollar, 1.45% weaker than its previous close and trading at its weakest since March 10.

The dollar index, which measures its performance against six currencies, hit 93.434, its highest since early November last year.[USD/]

"The statement of the Fed was also outlined with some misgivings (COVID, inflation), which have caused the markets to trade in a rollercoaster fashion since the release of the minutes," TreasuryONE currency strategist Andre Cilliers said in a note.

The minutes of the Fed's July meeting showed officials largely expect to reduce their monthly bond buying later this year, but consensus on other key issues appeared elusive, including the timing of the start of the taper and whether inflation, joblessness or the coronavirus pose a bigger risk to economic recovery.

Signs the Fed will start normalising policy tend to hurt assets in emerging markets like South Africa, as they have benefited from the U.S. central bank's ultra-loose approach.

South African government bonds also weakened, as the yield on the 2030 bond rose 7 basis points to 8.935%.

The Johannesburg All Share index fell 2.6% to 66,113 points, levels last seen on July 21, while the Top-40 index sank 2.85% to 59,854 points.

Sliding oil prices on worries about a demand downturn as the global economy slows saw petrochemicals firm Sasol lose 7.6%, while weak gold, platinum, palladium and iron ore prices hit commodity stocks, with the mining index down 3.73% [O/R] [IRN] [GOL/]

Tech stocks fell as Chinese internet behemoth Tencent Holdings Ltd, in which Dutch tech investment group Prosus is invested, slipped 3.5% as fears of more regulations clouded a quarterly profit jump.

China's Ministry of Industry and Information Technology on Wednesday rebuked 43 apps, including Tencent's WeChat for illegally transferring user data.

As a result, Johannesburg-listed shares of Tencent's biggest shareholder Prosus dropped 5.52%, while shares in Prosus' parent Naspers sunk 4.36%.

"The Chinese government's unrelenting crackdown on the internet industry is causing many global investors to 'throw in the towel' on their Chinese equity exposure, spurred by growing fears that other industries could soon be subjected to similar treatment," said Adam Bulkin, Head of Research at Sanlam Investments Multi-Managers.

(Reporting by Alexander Winning, Olivia Kumwenda-Mtambo and Nqobile Dludla; Editing by Shounak Dasgupta, Elaine Hardcastle)