Finally, investors have some relief after a week to forget for South African-based financial services groups Investec (INVP) and Old Mutual (OML). The shares lost a fifth of their value at the end of last week after markets punished the country's president, Jacob Zuma, for replacing finance minister Nhlanhla Nene with the little-known David van Rooyen. Investors loudly criticsed the perceived politicisation of a core government post.
Hence Mr Zuma's reversal on Monday, swapping Mr van Rooyen for Pravin Gordhan, the latter having served as finance minister between 2009 and 2014. This lifted the shares, but still left them around 15 per cent down. That is unsurprising given the depreciation of the rand against western currencies, which has dragged on performance at these companies. Year-to-date, the rand is down more than a fifth against the pound, as concern builds about the effect of the expected US rate rise on developed economies.
Investec managing director Bernard Kantor has contrasted the country's fortunes with the stronger demand for financial services among its companies, which improved results at the half-year stage. But the company's equity was still reduced by 9 per cent to £3.7bn at the end of September, largely due to the currency movement.
