A sell-off sweeps through global equities

By Siphelele Dludla Time of article published Mar 13, 2020

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JOHANNESBURG - South African stocks tumbled on the JSE yesterday as reaction to US measures to contain the spread of the coronavirus accelerated the sell-off sweeping through global equities.

The JSE All Share Index fell 9.72 percent to 44303points at the end of trade, plunging the most in more than 20 years.

The Top40 Index also tumbled 9.2percent to 39536 points as resources fell 14.53percent to 31610 points and industrials 9.30 percent to 60499points. The market remained in the red as investors swopped their investments for cash.

Sasol, which has bled more than 80percent off its value, led the rout, falling 29.36percent to R37.24.

Mining stocks followed the cue, plummeting 14 percent for a record decline, with Northam Platinum shedding 23.36percent to R86, Sibanye-Stillwater 22.6percent to R23 and Implats 21.81percent to 96.26.

Retail stocks also took a hammering, with Massmart slicing off 11.70 percent of its worth to R35.71, Woolworths falling 10.30percent to R31.60 and Shoprite 9.99percent to R103.50.

Michael Treherne, portfolio manager at Vestact Asset Management said Sasol might be forced to raise equity from shareholders to help strengthen their balance sheet.

“The implication is that as the Sasol share price lowers, it makes it harder for them to raise new money, which pushes the share price down even more, and so the cycle repeats itself,” Treherne said.

Investors around the globe are reeling this week in the wake of dramatic sell-offs on the markets, with US equity markets falling 7.6percent one day, only to bounce back by nearly 5percent the next.

The US and the Bank of England announced measures to bail out businesses hardest hit by the global turmoil while the Bank of Japan said it would ramp up stimulus and will show a more active stance on buying assets.

The JSE’s biggest investor Naspers took a 7.97percent hit to close at R2283.13.

FirstRand led the slide in the banking sector, falling 5.16percent to R49.58, while Absa fell 2.04percent to R119.62. Standard Bank eased 5.62 percent to R133.11 and Nedbank 5.23 percent to R145.

Peter Brooke, fund manager at Old Mutual Investment Group said the market reaction was not a major surprise with the threat of a global recession growing daily due to the continuing coronavirus lockdowns across the globe.

Brooke said the quick response from central banks, however, seemed to cheer markets which gained sharply shortly after Monday’s sell-off.

“This type of volatility is hugely unsettling and muddies the water for investors and fund managers alike,” Brooke said.

“But there is good news for importers and consumers who should be able to profit off the depressed prices.

“Those lower prices will then feed into lower inflation, opening the way for some interest rate relief.”


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