JSE All Share Index in its biggest one-day dive since 2016
The risk hardened as the epidemic spread to more than 30 countries, with South Korea reporting a jump in infections and Italy locking down an area of 50 000 people near Milan.
The rand weakened to as much as R15.18 to the dollar from Friday’s close of R15 after the IMF late revised its global and Chinese growth expectations for 2020 lower on Friday to 3.2 percent year on year from 3.3 and 5.6 percent from 6 percent. The JSE All Share Index eased 4.28 percent to 54 881.56 points, and the JSE Top 40 took a beating, dragging losses to 4.46 percent to 49 282.53 points.
"Investors have sold out of shares for five Fridays in a row, because they were unwilling to hold on over the weekend in the likelihood of bad news about the coronavirus,” said London Capital Group head of research Jasper Lawler.
Naspers, which holds about a third of the local bourse value, declined 4.24 percent, while luxury goods giant Richemont fell 2.77 percent.
Anglo American lost 8.37 percent, BHP Billiton fell 5.61 percent.
Bank stocks slid more than 4 percent, the biggest drop in more than eight months, as risk-off sentiment batters the rand.
Standard Bank led the bank losses with a 5.35 percent drop, Capitec lost 3.23 percent, while FirstRand dropped 4.03 percent.
“It seems the risks over the past several weeks have been understated; that’s why the US and some European stocks were testing new highs. Investors have been betting on a V-shaped recovery, supported by central bank easing. It now looks like the easy money won’t be enough to offset the impact of the virus,” said Hussein Sayed, chief market strategist at FXTM
Economists also pointed to jitters ahead of the budget tomorrow, saying that Mboweni may not be able to avert the downgrade fears.
“The rand has weakened ahead of the Budget on fears taxation will be substantially increased, worsening the growth outlook and that a workable solution will not be implemented to reduce Eskom’s debt and government’s debt projections,” Investec economist Annabel Bishop said on Monday.
South Africa’s growth has slowed down consistently from above 3 percent in 2011 to likely about 0.4 percent year on year last year.
Analysts said there was a risk that 2020 growth could come out closer to zero or sub-zero levels if substantial tax increases were implemented, with load shedding and higher electricity tariffs also placing GDP growth at risk.
They said Mboweni’s Budget is unlikely to convince Moody’s that he has a credible plan to rein-in government debt.