Last week’s credit downgrades to ‘junk status’ by the two major rating agencies and the posting of the biggest daily loss of the general retailers index saw investors jittery, on Monday.
The Depreciation of the Rand Following the Downgrade Saw Local Banking Stocks Lose Billions of Rands.
The rand continued its downward trend as Barclays Africa, Capitec, Nedbank, FirstRand and Standard Bank, all major banks in South Africa saw a loss of R134 billion in value between March 27 and April 7. This followed SA President Jacob Zuma’s Cabinet reshuffle, after recalling Pravin Gordhan the finance minister from an investors roadshow overseas and firing him last week.
Economy Slowing Down
The general retailer’s index fell almost 12 percent since the incident and shed 2.77 percent on Monday. Trader Greg Davies from Cratos Capital equities said that the downgrades will see the economy slowing down and people are just beginning to realise it, this will have adverse effects on the economy. This could see inflation which will curb consumption. In the weeks and months ahead the effect of the downgrade will be seen.
The All-Share index gained 0.54 percent to 53,139.86 points
The Top-40 index gained 0.73 percent to 46,422.49 points
The rand was weaker 1.07 percent from Friday’s close in New York at 13.9200 per dollar.
Anglo American advanced 1.6 percent higher.
While the fixed income, government bond advanced 7.5 basis points to 9.005 percent, the bond is due in 2026.
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