The weakness also saw Pick * Pay declining by 0.51percent to R62.08 a share, Clicks falling 0.2percent at R173.65 a share and Woolworths trading 1.12percent lower at R58.27 a share.
However, Africa’s biggest food retailer, Shoprite, strengthened by 0.25percent to R227 a share. Retailers had a major rally after the country escaped a double downgrade, taking a cue from a strong rand.
Daniel Isaacs, an analyst at 36One Asset Management, said economic growth was key to the recovery of the sector.
“What we need for a sustained retail recovery is economic growth and job creation rather than a bit of a bounce because there is no double downgrade,” he said, adding that pro-economic growth policies would also help the recovery.
Last Thursday, Fitch affirmed South Africa’s long-term foreign currency issuer rating at BB+ with a stable outlook. S&P Global Ratings last week lowered South Africa’s long-term foreign and local currency debt ratings by one notch each to BB and BB+, respectively, citing weak real nominal gross domestic product growth that had led to further deterioration of the country’s public finances beyond the rating agency’s previous expectations.
The rating agency has changed the outlook to stable from negative, saying the stable outlook was a reflection of its view that South Africa’s credit metrics would remain broadly unchanged next year. It was also of the view that political distraction could abate following the ANC’s national conference.
Meanwhile, Moody’s placed the country’s long-term foreign and local currency debt ratings of Baa3 on a 90-day review for a downgrade. The rating carried a negative outlook.
Rian le Roux, an economic strategist at Old Mutual Investment Group, said irrespective of the outcome of the ANC elective conference in December, South Africa had to restore fiscal health, including de-risking state-owned enterprises through much-improved overall management, and restoring business, investor and consumer confidence.
“Without a material improvement in confidence, it is hard to see a strong and/or sustainable local economic recovery. Remaining in the current structural growth rut for much longer will further undermine the fiscal situation and raise social pressures, outcomes which could have dire longer-term consequences for South Africa,” Le Roux said.
- BUSINESS REPORT