Stocks slip to four-week low before budget statement
JOHANNESBURG - South Africa’s main stock index dropped as much as 0.8% to the lowest since 28 September as major mining companies led the declines, with investors globally concerned about the impact of the worsening pandemic on economic activity and as jitters over next week’s U.S. presidential election rise.
Locally, traders are awaiting Finance Minister Tito Mboweni’s medium-term budget statement at 2 p.m.
The speech will outline the government’s revised spending framework for the next three years.
The benchmark index was 0.6% lower as of 9:58 a.m. in Johannesburg.
“The budget framework is sure to attract the attention of both investors and rating agencies as South Africa continues to grapple with sluggish economic growth, and a looming sovereign debt crisis,” said Bianca Botes, executive director at Peregrine Treasury Solutions.
“Local CPI is also due today and is expected to remain at the lower end of the target band.”
Investors are also digesting news that President Cyril Ramaphosa started a period of self-quarantine after a guest at a dinner he attended on Saturday tested positive for Covid-19.
Foreigners remained net sellers of South African stocks for a 10th consecutive session Tuesday, disposing of R1.14 billion ($70 million) worth of shares, according to exchange operator JSE Ltd. This is the longest stretch of outflows since 24 August.
More than 100 of the 141 listed companies were lower in early trade Wednesday, with the the FTSE/JSE Africa All Share Index falling for the third day, the longest stretch of losses since 22 September 22, as South Africa joined markets in Asia and Europe in retreating amid rising risk-off sentiment.
- Index of bank stocks dropped for a third day, the longest losing streak since 21 September.
- FirstRand Ltd. -2.4%, Standard Bank Group Ltd. -2.4%, Absa Group Ltd. -2.9%, Capitec Bank Holdings Ltd. -1.4%, Nedbank Group Ltd. -2.8%, Investec Plc -2.5%
- Gauge of mining stocks retreated 0.5% to the lowest since 6 July, as diversified miners fall. This is the fifth consecutive session of losses, the longest losing streak since 28 February.
- BHP Group Plc -0.9%, Anglo American Plc -0.9%, Anglo American Platinum Ltd. -1% Northam Platinum Ltd. -0.9%, Exxaro Resources Ltd. -1.5%, Sibanye Stillwater Ltd. -0.3%, Impala Platinum Holdings Ltd. -0.5%