Barclays Capital regards this year's budget as broadly rand positive from a capital flow and sound macroeconomic policy perspective.

Barclays Capital regards this year's budget as broadly rand positive from a capital flow and sound macroeconomic policy perspective.

“The Treasury is subtly suggesting the ZAR could recover from current levels over the next few years and is also looking at reducing the country's foreign debt exposure,” said the group's analysts in their post Budget commentary.

Despite the recent recovery in the rand in recent months, the Treasury was quick to mention that the local unit remains susceptible to any shifts in the level of global risk appetite, which in turn rests heavily on the rate at which global output recovers over the coming years.

The Treasury acknowledged that the rand, together with a number of other emerging market currencies, has been the recipient of the sharp increase in global liquidity in recent quarters. This is in keeping with the renewed foreign appetite for SA bonds that we have seen since the start of the year, they added.

“These recent bond inflows have more than compensated for the foreign withdrawal from SA equities and in so doing ensured that there has been a net positive inflow of portfolio capital this year, after the severe sell-off during H2 11,” the analysts said.

In the year to date foreigners have been net buyers of R8.625 billion of local bonds.

They noted that it was also heartening to see that the officials are also clearly looking to attract increased levels of FDI, given that there is an emphasis to make it 'easier to do business in SA' and also an ongoing desire to promote greater investment into Africa through SA.

“From a trade flow perspective, the Treasury also placed increased attention on the export sector. In this regard, the authorities are looking to improve the country's network infrastructure so as to address the transportation bottlenecks that have has been cited as a reason for why SA has not taken as much advantage of the prevailing commodity boom as one might have expected,” they said.

They added that based on the government's intended foreign borrowing over the next three fiscal years, the rand is implied to average R7.30 over the corresponding period.

“While one shouldn't draw too much of an inference about the exchange rate from these projected foreign bond proceeds, they do imply that the Treasury is more constructive about the ZAR in comparison to both the prevailing spot rate and the ZAR forward curve,” they said.

As expected, there were no changes in exchange control regulation at this year's budget, but it was heartening from an external vulnerability perspective that the Government intends to significantly reduce its foreign debt levels as a percentage of overall debt over the coming years - from 19.9% to 2.9% by 2014/15.

“The authorities are also optimistic that SA sovereign rating outlook will not be downgraded, which would also be supportive for the ZAR from a country risk premia perspective,” they added. - I-Net Bridge

The JSE closed in the red, tracking global stocks which were weaker due to fresh concerns over the implementation of Greece's second bailout package.

The JSE closed in the red on Wednesday, tracking global stocks which were weaker due to fresh concerns over the implementation of Greece's second bailout package.

A local trader said that economic forecasts released in Finance Minister Pravin Gordhan's budget speech did not have a significant impact on movements in the local bourse.

At 17:00 local time, the JSE all-share index was down 0.40% to 34,006 points. Banks fell 1.02%, followed by a 0.87% decline in financials, and a 0.56% fall in resources. Platinum miners shed 0.54%.

The gold index rose 0.33%, while industrials were flat (-0.09%).

The rand was at 7.73 to the US dollar, from 7.71 at the JSE's close on Tuesday. Gold was quoted at US$1,752.02 a troy ounce from US$1,748.02/oz at the JSE's previous close, while platinum was at US$1,716/oz, from US$1,679.99/oz before.

The trader said that markets had pulled back towards the afternoon after a fairly strong start. “Markets are just digesting everything and settling down a bit, maybe some consolidation as well,” the trader suggested.

US stocks opened a touch lower as European business activity unexpectedly slowed, prompting investors to pause after rising to the cusp of multi-year highs, the Dow Jones Newswire reported.

The Dow Jones Industrial Average slipped six points, or 0.1%, to 12,960 in early trading. The Standard & Poor's 500-stock index shed one point, or 0.1%, to 1361 and the Nasdaq Composite eased seven points, or 0.2%, to 2941.

Also hurting sentiment was a reading on business activity in the euro zone, which unexpectedly contracted in February. Markit Economics' purchasing managers' index fell to 49.7 from January's 50.4, below expectations of a rise to 50.8. Readings below 50 imply contraction.

Separately, some uncertainty remained over how Greece's second bailout deal, secured early Tuesday, would be implemented and how effective it would be. European markets traded broadly lower. The Stoxx Europe 600 shed 0.8%.

On the JSE, Anglo American (AGL) fell R4.46 or 1.35% to R325.10, BHP Billiton (BIL) shed R1.69 to R252 but Sasol (SOL) lifted 50 cents to R401.

In gold stocks, AngloGold Ashanti (ANG) added R2.63 to R331.94, Harmony Gold Mining (HAR) was up 82 cents to R99.83. Goldfields (GFI) however lost 63 cents to R122.22.

AngloPlats (AMS) was R4.00 higher at R574, while Impala Platinum (IMP) slipped R2.04 or 1.25% to R161.01, and Aquarius (AQP) dipped 37 cents or 2.07% to R17.51.

Among other miners, Exxaro (EXX) gained R5.80 or 2.91% to R204.86.

Among industrial stocks, SAB (SAB) added 90 cents to R307.90. Sappi (SAP) was 30 cents or 1.16% higher at R26.15.

Imperial Group (IPL) declined 1.16% or R1.62 to R138. Imperial on Wednesday reported diluted headline earnings per share of 688 cents for the six months ended December 2011 from 690 cents a year ago. Core earnings per share rose 30% to 756 cents.

An interim dividend of 300 cents per share was declared, up 36% on a year ago.

Revenue was 22% higher at R38.385 billion while operating profit improved 23% to R2.621 billion.

Altron (ATN) lifted R1.20 or 5.16% to R24.45, and Reunert (RLO) gained R1.22 or 1.79% R69.50.

In banking, RMB Holdings (RMH) gave up 44 cents or 1.45% to R29.96, while Standard Bank (SBK) shed R1.24 or 1.13% to R108.96.

The Foschini Group (TFG) rallied R2.47 or 2.16% to R111.07, Pick n Pay (PIK) fell 26 cents to R43.26, and Massmart (MSM) shed R1.04 to R181.51. - I-Net Bridge

The JSE turned negative at noon on Wednesday after a relatively positive start, with market players not making firm commitments ahead of the Budget Vote Speech later in the day.

The JSE turned negative at noon on Wednesday after a relatively positive start, with market players not making firm commitments ahead of the Budget Vote Speech later in the day.

“The market is playing around Tuesday's closing levels. It is almost without the trend,” said Ian Cruickshanks, market commentator at Nedbank Capital. “Market players are reducing their risk exposure in case there are major surprises in the Budget.”

At 12:00, the JSE all-share index was down 0.13% to 34,098.23 points, led by platinum miners, which shed 0.45%, but gold miners lifted 0.47%, while the resource index shed 0.37%.

Financials slipped 0.16%, banks were flat, as were industrials.

The rand was at 7.72 to the US dollar, from 7.71 at the JSE's close on Tuesday. Gold was quoted at US$1,754.89 a troy ounce from US$1,748.02/oz at the JSE's previous close, while platinum was at US$1,695/oz, from US$1,679.99/oz before.

European stocks ticked up and down between small losses and gains on Wednesday, as investors continued to dissect the new bailout deal for Greece and after mixed business activity data, although a decent set of corporate results offered some solace for investors, Dow Jones Newswires reports.

London's FTSE 100 index was down 0.33% to 5,908.49 at noon local time.

Although Greece has, in principle, secured a second bailout deal, there are still many questions to be asked about implementation and how effective the deal will be.

The next step is to see how willingly private sector creditors will participate in the deal. The Institute of International Finance has negotiated a deal on behalf of private holders of Greek debt that will see a 53.5% reduction in the nominal value of their holdings.

Asian stock markets closed mostly higher, with China giving investors something to ponder after the preliminary HSBC Purchasing Managers' Index, a gauge of manufacturing activity in the world's second-largest economy, rose to 49.7 in February compared with 48.8 in January.

Despite the improvement, the index remained below the key 50-mark, indicating the manufacturing sector continued to contract albeit at a slower pace.

Japan's Nikkei Stock Average rose 1.0%, while China's Shanghai Composite Index advanced 0.7%.

On the JSE, Anglo American (AGL) was down R3.56 or 1.08% to R326, BHP Billiton (BIL) lost R1.30 to R252.39 but Sasol (SOL) added R1.61 to R402.11.

AngloGold Ashanti (ANG) pocketed R2.59 to R331.90, Harmony Gold Mining (HAR) picked up 61 cents to R99.62 and DRDGOLD (DRD) lifted 9 cents or 1.46% to R6.25.

Anglo American Platinum (AMS) gained R2.49 to R572.49, while Impala Platinum (AMS) lost R1.65 or 1.01% to R161.40.

Massmart (MSM) was down R1.86 or 1.02% to R180.69. The consumer goods distributor reported headline earnings per share of 416 cents for the 26 weeks ended December 2011 from 366 cents a year ago. Diluted HEPS were 407.3 cents from a previous 343 cents.

An interim dividend of 252 cents was declared, unchanged from the previous period.

Operating profit before forex and integration costs was up 4.8% to R1.326 billion, while revenue was up 14.9% to R31.54 billion.

Imperial Holdings (IPL) was up six cents to R139.68. The transport and logistics group reported diluted headline earnings per share of 688 cents for the six months ended December 2011 from 690 cents a year ago. Core earnings per share rose 30% to 756 cents.

Revenue was 22% higher at R38.385 billion while operating profit improved 23% to R2.621 billion.

An interim dividend of 300 cents per share was declared, up 36% on a year ago. - I-Net Bridge

The rand was steady against the dollar in noon trade as it tracked a euro that was stuck in ranges as investors mulled the implications of the second Greek bailout.

The rand was steady against the dollar in noon trade on Wednesday as it tracked a euro that was stuck in ranges as investors mulled the implications of the second Greek bailout.

“There's also the Budget Speech to consider later on today, although I don't think we'll see anything major with regards to the rand,” a local currency trader said.

“However, players are reluctant to position heavily either way until they see what the Budget contains,” the trader added.

While Consumer Price Index (CPI) data had shown that inflation had moved higher and this was rand negative, the figures had not impacted the local currency, he added.

“Dollar rand is stuck in a 7.64 to 7.75 range at present and looking ahead I see a weaker rand.”

At 11:33 local time, the rand was bid at R7.7260 to the dollar from its previous close of R7.7313. It was bid at R10.2182 to the euro from R10.2386 before, and at R12.1567 against sterling from R12.1995 previously.

The euro was bid at US$1.3221 from its previous close of US$1.3249.

Earlier Statistics SA said the increase in SA's CPI was 6.3% year on year (y/y) in January from 6.1% y/y in December.

The inflation rate was expected to have ticked up slightly to 6.2% y/y in January, according to a survey of leading economists by I-Net Bridge. Forecasts among the economists ranged from 6.1% to 6.3%.

At 14:00 local time, SA Finance Minister Pravin Gordhan will deliver his Budget Vote Speech.

Meanwhile Dow Jones Newswires reported that in European markets, the euro traded in tight ranges against the dollar as doubts remained on Greece's ability to put its debt load on a sustainable footing.

Although Greece had, in principle, secured a second bailout deal, there were still many questions to be asked about implementation and how effective the deal would be.

The next step was to see how willingly private sector creditors would participate in the deal. The Institute of International Finance had negotiated a deal on behalf of private holders of Greek debt that would see a 53.5% reduction in the nominal value of their holdings.

There are, however, still concerns about contagion risks.

Dominic Rossi, global chief investment officer of equities at Fidelity Worldwide Investment said: “A Greek default has been priced into equity markets but what is far less clear is the implications for other nations, particularly Portugal, Spain and Italy. Whilst we appreciate progress has been made, particularly in Italy ... this remains a multi-year workout during which they will remain vulnerable to external shocks such as a Greek default.”

In fact, Portugal's 10-year government bond yield did not paint a pretty picture as in European trade mid-morning, its yield was up 3.90 basis points at 12.031%.

And purchasing managers' figures for the eurozone's largest economies were also a little disappointing.

French business activity grew at a reduced pace in February. The composite purchasing managers' index for France fell to 50.6 in February from a five-month-high of 51.2 in January. A reading above 50 signals growth. - I-Net Bridge

European shares were flat in early trade, after upbeat manufacturing data from China and France was offset by continued worries over Greece's ability to undertake austerity measures.

European shares were flat in early trade on Wednesday, after upbeat manufacturing data from China and France was offset by continued worries over Greece's ability to undertake austerity measures.

At 10:13 SA time, the FTSEurofirst 300 index of top European shares was flat at 1,084.90 points. The index is up 27 percent from a 2011 low, hit in September.

“We think this rally is not necessarily over. European valuations continue to discount a lot of negativity,” said Guy Foster, head of portfolio strategy at Brewin Dolphin.

“But there will be a lot of focus for nine days on potential execution risks for the measures that Greece needs to put in place in order to receive the next tranche of the bailout.”

France's manufacturing sector managed a marginal but unexpected return to growth in February after six months of contraction, suggesting greater economic resilience than seemed likely a few months ago, although the services sector weakened markedly.

PSA Peugeot Citroen, Europe's no. 2 car maker, rose 8.3 percent after saying it was in talks over potential cooperations and alliances but did not name its possible partners, after media reports said it was in advanced discussions with General Motors. - Reuters

Hong Kong shares reversed early losses to end higher for a second straight session.

Hong Kong shares reversed early losses to end higher for a second straight session on Wednesday, with Chinese developers outweighing weakness in Li & Fung Ltd after weaker-than-expected earnings from customer Wal-Mart Stores Inc.

The Hang Seng Index closed up 0.33 percent at 21,549.28. The China Enterprises Index of top mainland listings in Hong Kong finished up 1.15 percent at 11,823.6.

The Shanghai Composite Index ended up 0.93 percent at 2,403.59, the highest close since November 29 and above its 125-day moving average for the first time since last May. A-share turnover surged to the highest since November 3.

HIGHLIGHTS:

* Chinese property developers were strong after the official Shanghai Securities News, citing Shanghai's housing regulator, reported on Wednesday that non-local residents of Shanghai would qualify to buy second homes once they had been resident in the city for three years, sparking talk of easing in the embattled sector.. Agile Property Holdings Ltd jumped 7.2 percent in more than twice its 30-day average volume as investors covered short positions. Short-selling averaged about 23 percent of Agile's total turnover in the first two days of the week.

* Li & Fung Ltd was among leading losers in Hong Kong, down 3.2 percent after Wal-Mart, for which it manages supply chains, reported weaker-than-expected earnings and forecasts that suggest results in this quarter and fiscal year may again disappoint.. Before Wednesday, Li & Fung was up more than 25 percent this year, largely on improving US data, after slumping more than 36 percent in 2011 and underperforming the 20 percent loss on the Hang Seng Index.

* Alibaba.com Ltd rose more than 42.7 percent in more than 32 times its 30-day average volume to a seven-month high after resuming trading after a more than a week. It followed an announcement that parent Alibaba Group would take it private for about $2.5 billion at its IPO price. - Reuters

The euro and European shares firmed as investors waited to see whether fresh economic data will confirm a fragile economic recovery in the euro zone is underway but concerns about the latest Greek bailout deal weighed.

The euro and European shares firmed on Wednesday as investors waited to see whether fresh economic data will confirm a fragile economic recovery in the euro zone is underway but concerns about the latest Greek bailout deal weighed.

The euro area and German Purchasing Manager's Indexes (PMIs), due out at 10:58 SA time, are expected to confirm the modest expansion seen in the January data, suggesting the debt-stricken region should avoid falling into a technical recession.

Asian shares eked out modest gains earlier after China's manufacturing PMI rose to a four-month high in February although it remained in contraction territory. The FTSEurofirst index of top European companies opened up just 0.1 percent at 1,079.13 points on Wednesday.

Improved risk appetite on the back of the Greek deal has quickly given way to fresh doubts over whether the country will make the agreed budget cuts and whether the plan is enough to make its debt sustainable.

The euro was up 0.14 percent to $1.3258 after pulling back from near two-week highs of $1.3293 on Tuesday, and it hit a 3-month high versus a broadly weaker yen.

The Japanese currency has weakened to be above 80 yen to the dollar for the first time since July 2011 as rising oil prices and an easier monetary policy stance by the Bank of Japan hit demand. - Reuters

Japanese shares jumped as exporters rose strongly with a fall of the yen.

Japanese shares jumped Wednesday as exporters rose strongly with a fall of the yen.

The benchmark Nikkei 225 Stock Average gained 90.98 points, or 0.96 per cent, to close at 9,554 while the broader Topix index was up 9.11 points, or 1.12 per cent, at 825.4.

Exporters got a boost as the yen topped 80 yen to the dollar. A weaker yen makes Japanese goods less expensive overseas and improves repatriated earnings.

Honda Motor Co surged 2.1 per cent, Toyota Motor Corp rallied 1.8 per cent and Sony Corp gained 1.5 per cent.

Market sentiment was also lifted Wednesday after the Dow Jones Industrial Average briefly topped 13,000 overnight for the first time since May 2008.

On currency markets at 3 pm (08:00 SA time), the dollar traded at 80.02-05 yen, up from Tuesday's 5 pm quote of 79.79-80 yen.

The euro was quoted at 105.94-96 yen, up from 105.75-79 yen late Tuesday, and at 1.3235-3240 dollars, down from 1.3253-3254

dollars. - Sapa-dpa

The JSE opened higher as news of a bailout package for Greece continued to lift market sentiment.

The JSE opened higher on Wednesday as news of a bailout package for Greece continued to lift market sentiment.

At 09:17 local time, the JSE all-share index was up 0.24% to 34,224.81 points, with platinum miners adding 0.49%, and gold miners rising 0.48%.

Industrials were 0.29% higher, while resources added 0.26%, and banks gained 0.13%. Financials lifted 0.10%.

The rand was at 7.71 to the US dollar, unchanged from the JSE's close on Tuesday. Gold was quoted at US$1,758.04 a troy ounce from US$1,748.02/oz at the JSE's previous close, while platinum was at US$1,701.50/oz, from US$1,679.99/oz before.

Despite the Greek news boosting bourses, a local trader said market movements had been “fairly muted”, and that these were now “less and less about Greece.” He suggested that economic developments out of China, and US economic data were driving the market. He expected jobs data out of the US this week to move markets significantly.

Dow Jones Newswires reported that European stock markets might start mostly lower with investors taking a circumspect view of the Greece bailout deal after so many fits and starts before. The euro was mixed, with oil futures and spot gold lower.

Greece's government submitted to parliament late on Tuesday a long-anticipated bill to implement a planned EUR100 billion debt write-down, which foresees a controversial provision designed to strong-arm investors into the deal.

In Asia, stock markets were mixed as hopes China would further ease policy following soft manufacturing data were offset by general caution about Greece's future despite an 11th hour rescue package to ease its debt burden.

The Nikkei rose 1.0%, the S&P/ASX was flat, the HSI gained 0.2%, the Kospi added 0.2%, the Taiex advanced 1.0%, the Sensex slid 0.3%, and the Shanghai Composite rose 0.7%.

On the JSE, Anglo American (AGL) was up 94 cents to R330.50, and Sasol (SOL) was up R1.90 to R402.40. BHP Billiton (BIL) gained 11 cents to R253.80.

BHP Billiton (BIL) has priced a five tranche Global Bond under its debt shelf registration statement, which had been previously filed with the US Securities and Exchange Commission.

AngloGold Ashanti (ANG) added R2.69 to R332, while Harmony Gold Mining (HAR) lifted 74 cents to R99.75.

Anglo American Platinum (AMS) rose R4 to R574, and Impala Platinum (IMP) lifted 95 cents to R164.

Exxaro (EXX) gained R2.64 or 1.33% to R201.70.

In industrials, SAB (SAB) was up R2.48 to R309.48.

Imperial (IPL) rose R1.28 to R140.90. The group on Wednesday reported diluted headline earnings per share of 688 cents for the six months ended December 2011 from 690 cents a year ago. Core earnings per share rose 30% to 756 cents.

An interim dividend of 300 cents per share was declared, up 36% on a year ago.

Revenue was 22% higher at R38.385 billion while operating profit improved 23% to R2.621 billion.

In telecommunications, Blue Label Telecoms (BLU) lifted 12 cents or 1.90% to R6.42. The group on Wednesday reported a 44% rise in headline earnings per share to 36.74 cents for the six months ended November 2011 from 25.45 cents a year ago. Diluted HEPS rose to 36.29 cents from 25.22 cents before.

The group reported a 7% increase in revenue to R9.2 billion, while gross profit was 14% higher at R590 million. EBITDA increased by 47% to R438 million which includes a once off income receipt of R79.4 million. The disclosure of the source and circumstance of the payment are prohibited by a confidentiality agreement, the company said.

Net profit after tax and non-controlling interests from continuing operations increased by 43% to R275 million. Excluding the once off income receipt, the increase was 7%.

The JD Group (JDG) gave up 57 cents or 1.19% to R47.23.

Massmart (MSM) was down R3.55 or 1.94% at R179. The consumer goods distributor on Wednesday reported headline earnings per share of 416 cents for the 26 weeks ended December 2011 from 366 cents a year ago. Diluted HEPS were 407.3 cents from a previous 343 cents.

An interim dividend of 252 cents was declared, unchanged from the previous period.

Operating profit before forex and integration costs was up 4.8% to R1.326 billion, while revenue was up 14.9% to R31.54 billion. - I-Net Bridge

The rand was flat against the dollar in early morning trade as it tracked a euro that lacked direction.

The rand was flat against the dollar in early morning trade on Wednesday as it tracked a euro that lacked direction.

“Our market is also lacking direction today and it looks as if the rand is going to move into ranges,” a local currency trader said.

He put dollar rand in a range of 7.70 to 7.78 for the first half of the trading day.

While SA Finance Minister Pravin Gordhan was due to deliver his Budget Speech later today, the trader said that this was not expected to be a rand moving event.

“Maybe the Budget Speech will move bonds, but I don't think it'll impact on the currency - and the same for CPI data due out this morning.”

At 08:33 local time, the rand was bid at R7.7342 to the dollar from its previous close of R7.7313. It was bid at R10.2375 to the euro from R10.2386 before, and at R12.2087 against sterling from R12.1995 previously.

The euro was bid at US$1.3239 from its previous close of US$1.3249.

Statistics SA is expected to release the CPI figure for January this morning. CPI is seen as coming in at around 6.2% from 6.1% in December.

Barclays Capital said in a note on Wednesday morning that yesterday's price action was a classic example of “buy the rumour sell the fact”, because once EU finance ministers had agreed to grant Greece more financial assistance after weeks of deliberation, the rand sold-off.

“Doubts over whether Greece can actually reduce its debt to 120% of GDP by 2020 as well as the adverse growth implications associated with yesterday's extended surge in energy prices curbed global risk appetite.”

Barclays Capital added that this morning's sub-50 PMI (which implies contraction) Chinese manufacturing data was not helping global sentiment either, and explained why Asian equity markets were in the red this and why the dollar was regaining favour.

Meanwhile Dow Jones Newswires reported that the euro remained range-bound during Asian trading on Wednesday as caution over whether Greece could follow through with reforms after an ambitious 130 billion euros rescue deal prevented the common currency from moving in a clear direction.

Tuesday's agreement by euro-zone finance ministers would see Greece's private creditors take a loss of 53.5% on their Greek bonds in order to put the debt-laden country on a sustainable footing and avert a catastrophic default.

But the deal still faced several hurdles, including the successful completion of a bond swap offer to private creditors, as well as parliamentary approvals in Germany, Austria, Finland and the Netherlands.

Investors were also watching to see if Greece could smoothly carry out the reforms it had agreed to as part of the deal.

“While the Greek government averted the risk of defaulting on bond redemption payments due in March, work remains over its fiscal austerity and implementation of economic reforms,” said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

“The sense of caution over the future of the European debt crisis remains strong, weighing on the market,” she said.

Junya Tanase, chief forex strategist at JP Morgan in Tokyo, said that while the agreement on a fresh bailout had improved investor risk sentiment, lingering uncertainty over Greece had kept stocks and yen crosses from further substantial gains.

“The market will continue to be susceptible to news and headlines,” he said.

Looking forward, the global markets were expected to watch a meeting of finance officials from the Group of 20 advanced and developing nations in Mexico this weekend for any further developments on international support for the euro-zone. - I-Net Bridge