Some volatility

Local financial markets maintained their pattern of the past week, with the rand stronger against the dollar and equities closing weaker.

The rand remained volatile, trading below R7 for most of the week against the US dollar, ending the week at R6,99 from R7,07 in the previous week. The local unit, however, eased slightly against the euro and British pound, ending at R8,87 and R12,93 respectively on Friday from R8,72 and R12,79 in the previous week.

Domestic treasuries were mixed, with the yield on the R150 2005 rising to 8,54% from R8,49% while that on the longer-dated R153 2010 easing to 9,35% from 9,41% a week earlier.

Money market rates were mixed, with the yields on the 3-, 9- and 12-month NCDs closing lower at 8,10%, 8,30% and 8,55% respectively on Friday from 8,15%, 8,40% and 8,75% in the previous week.

The yield on the 3-month NCD rose to 8,15% from 8,10% while the 3-month jibar was up to 7,97% from 7,92% a week ago.

Equity prices were mostly down last week. The volatility in the currency markets and a relatively softer gold price earlier in the week weighed on the equities.

The FTSE/JSE all-share index lost 39,5 points or 0,4% to 10 809,8 on Friday. The resources index fell by 124,7 points or 1,1% to 11 467,7, while the gold index ended

the week 0,2% lower at 2 454,4 from 2 459,9 in the previous week.

The industrial index was down by 17,5 points or 0,2% to close at 8 592,6 on Friday from 8 610,1, but financial stocks closed in positive territory at 9 658,2 from 9 586,0 in the previous week, a gain of 0,8%.

The impact of low inflation and falling interest rates late last year continued to boost retail activity, with total retail sales, as released by Statistics South Africa, showing robust growth of 9,5% year-on-year in November.

President Thabo Mbeki gave his State of the Nation Address in parliament on Friday. The President's speech was more on the progress made over the first decade of democracy.

Improvements regarding social services and economic developments since 1994 were highlighted as positive steps towards securing the future of the country.

The President said that the government did not ‚foresee any need for new and major policy initiatives' but to continue with vigorous implementation of the policies already in place geared towards the eradication of poverty and underdevelopment in the country.

He said government will move ahead to implement programmes such as urban renewal and rural development, the expanded public works programme, the expansion of micro-credit and small enterprises and the general development of the social and economic infrastructure.