ETF Trends
ETF Trends

South Africa is showing renewed vigor that’s helping its currency exchange traded fund (ETF).

The South African rand strengthened against the euro for the second week in a row, showing the country’s strength and endurance in the global market. At the moment, the rand is outperforming high-yielding currencies, and it strengthened against the euro as interest rates neared their highest for the past five years, explains Garth Theunissen for Bloomberg.

The rand also offered the fourth-best carry-trade return against the euro among the 16 most popularly traded counterparts, as watched by Bloomberg. The rand gained 1.3% to 11.8922 per euro in Johannesburg.

Meanwhile, South Africa’s FTSE/JSE Africa All Share Index fell for the first time in three days, for a 2.2% decline last week, reports Garth Theunissen and Vernon Wessels for Bloomberg. The country’s inflation rate is likely to have risen for the 10th straight month, and it might be at its highest point since the targeted measure was introduced in 1998, reports Mike Cohen for Bloomberg.

The central bank has raised rates six times in one year, but has signaled that it’s done.

Several of the country’s biggest mining companies are in line to deliver earnings this week, including Anglo Platinum today, AngloGold Ashanti on July 31 and Anglo American Plc on July 31.

ETFs that could be impacted by South Africa’s activity and the forthcoming earnings reports include:

  • WisdomTree Dreyfus South African Rand (SZR): Launched July 8
  • NETS FTSE/JSE Top 40 Index Fund (JNB): launched May 22; Anglo Platinum is 6.6%; Anglo American is 14.7%
  • iShares MSCI South Africa (EZA): down 13.8% year-to-date; Anglo Platinum is 5.4%; AngloGold is 4.3%

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.