JOHANNESBURG - South African stocks
plunged to a more than four-year low on Monday, joining a global
sell-off in riskier assets as oil prices collapsed more than
30%, hitting chemical and energy firm Sasol the
Saudi Arabia's plans to hike crude production and slash its
official selling price came after Russia on Friday balked at
steep production cuts proposed by the Organization of the
Petroleum Exporting Countries (OPEC) to stabilise prices hit by
economic fallout from the coronavirus.
The decline in the Johannesburg All-Share index and
Top-40 index was compounded by fears the impact from
the fast-spreading coronavirus will intensify.
South Africa confirmed its first case of the virus on
Thursday, and by the weekend officials had confirmed another two
At 0904 GMT, the All-Share index weakened 5.84% to 49,025
points, a level last seen in February 2016, while the Top-40
index tumbled 6.02% to 43,947, its weakest level since January
"The collapse in oil is being felt across all asset classes
today," said FXTM Chief Market strategist Hussein Sayed in a
"Over the past three weeks, investors have been revisiting
their portfolio's asset allocation to adjust for the coronavirus
impact. Now, they also need to take into consideration the free
fall in oil prices which could accelerate recession risks."
Chemical and energy firm Sasol was the biggest decliner,
sitting at the bottom of both indexes and on track for its
biggest ever one-day fall. Shares plunged 44.46%, to a
Mining stocks also took a hit as silver,
palladium, platinum and gold prices fell.
The mining index slumped 7.14%.
In the currency market, the rand was 1.66% weaker
at 15.9300 per dollar at 0925 GMT, having plunged to 16.9850,
its lowest since February 2016, earlier in the session.
The sell-off was exacerbated by low liquidity in early
trade, resumption of power cuts and the ongoing unwinding of
carry trades as downgrade risks heightened.
Bonds also suffered despite indications that central banks
in developed markets, including the U.S. Federal Reserve, would
intervene further by cutting lending rates to shield their
"While this should theoretically play into the hands of the
rand as the interest rate differential grows, only time will
tell whether this is sufficient to prevent a full-blown rotation
out of EM assets," ETM Analytics economists said in a note.
"We've been warning for some time that the imprudent fiscal
environment and fundamental pressures that exist in South Africa
suggest the rand will be amongst the most susceptible to an
external shock, and this is exactly what appears to be
materializing at the moment."
The yield on the benchmark 2030 government issue
was up 12 basis points to 8.14%.