- Slump wipes $54 billion off South African stocks in seven days
- Johannesburg’s benchmark erases last of its gains for 2023
According to Bloomberg article published on March 15, 2023, Wednesday’s global slump in stocks dragged South Africa’s benchmark equity index lower for a seventh day, the longest losing streak for the market since October 2018.
The FTSE/JSE Africa All Share Index fell 2.8%, its sharpest decline in almost six months. The seven-day slide has wiped about 1 trillion rand ($54 billion) off the value of stocks in Johannesburg. The gauge has also erased the last remaining gains it had posted for this year.
Renewed concerns over the health of banks prompted selling in the sector in Europe and the US, combining with recession risks and the outlook for hawkish monetary policy to batter sentiment. Locally, traders have had to digest a steady stream of updates from companies like MTN Group Ltd. setting out the blow to their operations and earnings from South Africa’s crippling power crisis.
Global luxury retailer Richemont was the biggest single drag on the South African market Wednesday, dropping 4%, while miner Anglo American Plc plunged 7.1%. An index of local banking stocks sank 2.8%, sliding for a fourth day to its lowest level in almost five months.
“The fallout in the US bank sector has led to concerns around potential contagion, and on this basis — as well as due to the economic environment, South African banking shares have been under pressure,” Unum Capital analyst Lester Davids said in emailed comments.
The declines in South African stocks would have been even worse if not for gold producers, which rose as haven demand boosted bullion prices. AngloGold Ashanti Ltd. and Harmony Gold Mining Co. led gains in the sector.
“We have seen the impact of the persistent loadshedding in South Africa on various economic indicators,” said Abdul Davids, head of research at Camissa Asset Management, using a local term for rolling blackouts. “Also, recent statements by executives of corporates like MTN have quantified the impact of the energy crisis on corporate profits and the realization that the energy woes will persist for some time. All of the above is taking a toll on risk appetite for South African stocks.”
