Investors get jitters over extension of lockdown
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JOHANNESBURG - SOUTH African markets retracted slightly yesterday, with investors concerned over the economic impact of the level 3 lockdown extension.
The JSE All Share Index closed 0.35 percent lower at 63 535 index points after touching 63 979 points, close to a high of 64 022 points, during early trade.
Mining stocks were 1.45 percent down to 61 290 points, general retailers eased 0.05 percent to 4 490 points, while the banks index rose 0.26 percent to 6 885 points.
President Cyril Ramaphosa on Monday announced the extension of the National State of Disaster, with the adjusted level 3 lockdown remaining for another 30 days to February 15.
FXTM’s Lukman Otunuga said the decision to extend the lockdown would most likely raise fears around more job losses as small businesses were struggling to survive.
“But it must be kept in mind that South Africa is currently experiencing a second wave of the pandemic with cases topping 1.2 million – the highest number of infections in Africa.
“If the vaccine can be swiftly distributed across South Africa and daily infections fall as a result, the government may have room to relax restrictions which in turn could revive growth,” he said.
South Africa has recorded more than 190 000 new Covid-19 cases and more than 4 000 deaths since the beginning of this year as the country struggles with the second wave of the pandemic.
Business Leadership SA chief executive Busi Mavuso said it was critical for the government to be transparent about any harsher restrictions it may introduce, giving business forewarning so there is time to prepare.
“To ensure the economy is not derailed, the government is going to have to take the various industries into its confidence with its lockdown measures ahead of time to avoid courtroom battles that will only serve to distract from the job at hand,” she said.
Ramaphosa’s government has to date secured 20 million doses of the vaccine to be delivered mainly in the first half of the year.
Old Mutual chief economist Johann Els said that the government was hesitant to impose a hard lockdown as it was trying to keep the economy going without too much disruption.
Els forecast that the economy would rebound by about 5 percent because of strong growth expected in the US and a strong rebound in China.
“However, we have to keep in mind that vaccines will be the biggest downside risk if we don’t get them on time,” Els added.