JPMorgan said on Tuesday the recently imposed 30% US tariffs on SA exports are expected to have a limited effect on the country’s assets, as markets have “largely priced in the reality of higher tariff headwinds”.
SA exports to the US were hit with a 30% tariff last week, the highest rate in Sub-Saharan Africa, but the country said on Tuesday it will submit a revised trade offer to Washington in hopes of getting a lower rate.
At 3.40pm GMT, the rand traded at 17.57 against the dollar, more than 1% stronger than Monday’s close, boosted by a weaker dollar.
“A sustained 30% tariff at the margin will have a limited effect on the rand, given that, with many tariffs on many different countries, the combined effect on growth is larger in the US than for many other economies, contributing to a broad USD weakness,” JPMorgan said in a note.
It also said a reduction to the 15%-20% range aligning with regional peers could ease economic pressure and support domestic equities, the rand and bonds.
The JSE’s Top 40 index closed up 0.6%.
“Across the broader JSE, the tariff impasse has limited direct spillovers,” said the note.
“Dual-listed stocks, though exposed to the US market, are driven by global factors rather than being sensitive to the 30% SA tariff, and (platinum group metals) miners remain unaffected due to their critical minerals status.”
SA’s benchmark 2035 government bond was unchanged, with the yield at 9.67%.
In fixed income, reactions are expected to be muted, with minor yield moves in SA government bonds reflecting the relatively contained macro shock.
Reuters
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