Rand Hedged Stocks

A Rand Hedged stock is the stock of a company that earns it’s revenue in a foreign currency like the Sterling or Dollar.

More often than not these stocks are duel listed, often listed in  several countries all around the world, an example of which is AngloGold Ashanti, listed in the US, England, Australia and South Africa.

Why do Rand Hedged Stocks help when the Rand weakens?

Simply, as the Rand weakens, the Dollar or Sterling usually becomes more valuable, meaning the companies earnings when converted back into Rands will be a higher.

There is an inverse correlation between Rand Hedged stocks and the value of the Rand.

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(Rand/Dollar 1 Year Graph)

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(Sasol’s 1 Year Graph)

There are many different Rand hedges on the JSE, but the four largest are SABMiller, Naspers, Richemont and British American Tobacco (BAT).

Link: Is there still value in the big hedges?