The stock market crashed on Friday driven by heavy losses in travel, hospitality and leisure groups over fears that the new Covid-19 variant will lead to fresh lockdowns, travel restrictions and lower economic growth.
The JSE suffered the worst day in 20 months as the All Share Index slipped by 2.75 percent to close at 68 614 index points, its biggest daily decline since March 2020.
Hospitality shares led the bloodbath after the UK, the US and several other countries put South Africa back on the red list following the detection of a new highly transmissible Covid-19 variant in the country.
The shares of City Lodge Hotels fell 15.09 percent to close at R4.22 per share, Sun International declined by 7.45 percent to R23.10 per share, Tsogo Sun Gaming was 7.11 percent lower at R9.80, while Hosken Consolidated Investments fell 8.46 percent to R73 per share.
However, Sun International’s chief operating officer Graham Wood was upbeat on Friday, saying the group was still expecting a great end-of-year tourist season.
“It was disheartening to wake up to the news that we are back on the UK’s red list, but the majority of our bookings for the season are from domestic travellers, so we’re still preparing for a really busy season,” Wood said.
The Covid-19 variant, called B.1.1.529, has dozens of mutations that may make it more contagious and adept at evading the protection conferred by vaccines or prior infection.
The Capital Hotels and Apartments managing director Marc Wachsberger called for calm and also for the Department of Health to stop fear mongering through a programme of measured communication.
“I’m certain that in just a week or two we will have the data that says that this new variant does not evade vaccines,” Wachsberger said.
The government has expressed concern that placing the country onto a red list was a knee-jerk reaction as these same countries have higher infarction rates than South Africa.
The latest round of travel bans poses a significant setback to South Africa’s already vulnerable tourism and services sectors which were gearing up to welcome an influx of foreign visitors over the festive season and gain much needed traction.
The World Travel and Tourism Council indicated that at least 470 000 tourism and travel sector jobs have been lost, contributing to an astronomical decline of R181 billion to the South African economy in the wake of the Covid-19 pandemic.
Statistics SA has reported that the overall number of arrivals and departures of tourists has fallen by 71 percent, with little signs of improvement in the foreseeable future.
On Friday, Tourism Minister Lindiwe Sisulu convened an urgent meeting with private sector tourism stakeholders to find ways to mitigate the effects of the new variant.
They agreed that the immediate priority was to protect domestic tourism over the festive season by instituting measured regulations to stem the spread of the new variant, while safeguarding the industry’s ability to operate.
Rosemary Anderson, national chairperson of trade union Federated Hospitality Association of South Africa said: “Our industry has had to endure being thrust from wave to wave for the past 20 months and it simply isn’t sustainable to keep businesses open and livelihoods intact.”