By Tannur Anders
JOHANNESBURG (Reuters) -South Africa’s rand, stocks and government bonds slumped on Monday after U.S. President Donald Trump said he would suspend aid to the country.
Trump said, without citing evidence, that “South Africa is confiscating land” and “certain classes of people” were being treated “very badly” on Sunday, adding that he would cut off funding until the matter was investigated.
South African President Cyril Ramaphosa, who recently signed into law legislation allowing land to be expropriated under specific conditions, said his government had not confiscated any and he would talk to Trump to foster a better understanding.
At 1502 GMT, the rand traded at 18.8675 against the U.S. dollar, 0.9% weaker than its closing level on Friday. Earlier in the day it was down almost 2%.
On the Johannesburg Stock Exchange, the Top-40 index closed about 0.4% lower, while the benchmark 2030 government bond price slid and the cost of insuring South African debt against default rose to its highest since early August.
U.S. funding to South Africa mainly involves supporting its HIV/AIDS programme, but Trump’s comments caused investor unease about the potential for a broad review of diplomatic and economic ties.
Casey Sprake, an investment analyst at Anchor Capital, said the autos and agriculture sectors were especially vulnerable as South Africa currently enjoys duty-free access to the U.S. market under a Clinton-era trade initiative.
Annabel Bishop, an Investec economist, said the rand was also under pressure due to Trump’s tariffs on Canada, Mexico and China, which lifted the dollar to multi-year highs against many global peers.
South African manufacturers, meanwhile, posted a deterioration in business conditions for a third month in a row.
(Additional reporting by Sfundo Parakozov and Bhargav Acharya in Johannesburg and Libby George in London; Editing by Alexander Winning, Alexander Smith and Christina Fincher)
