Worst JSE quarter in nearly 22 years

The JSE capped its worst quarter since September 1998 on Tuesday, while it had its poorest month since September 2008 as fear around the rapid spread of the coronavirus wreaked havoc in global markets in March.

While recent stimulus and relief measures taken by central banks to support the financial market have aided global equities, the local bourse dropped 22.06% in the first quarter of 2020, its worst in nearly 22 years. It fell 12.83% in March, its one-month biggest drop since the start of the financial crisis during 2008, when it slumped 13.96%.

Fear that Covid-19 could have a drastic effect on economic growth weighed on investor sentiment in March and the rand weakened more than 11%, making it the fifth -worst performer among emerging-market currencies surveyed.

It also touched record lows against hard currencies, hit by global risk-off sentiment and a downgrade of SA’s sovereign credit rating by Moody’s Investors Service on Friday. The rand and the JSE were, however, in positive territory on Tuesday, as better-thanexpected purchasing managers’ index (PMI) data from China lifted global markets.

Swissquote Bank senior analyst Ipek Ozkardeskaya said expansion in China’s PMI confirmed that activity picked up after weeks of drastic slowdown due to the pandemic. “That has been a relief for investors globally.”

At 5.35pm, the rand had firmed 0.74% to R17.7712/$, 1.23% to R19.5373/€ and 0.12% to R22.1116/£. The euro had weakened 0.44% to $1.0996.

The JSE all share gained 2.48% to 44,490.31 points and the top 40 2.47%. Banks jumped 8.89% and financials 6.42%. Shortly after the JSE closed, the Dow was up 0.56% at 22,451.59 points. In Europe, the FTSE 100 added 1.80%, France’s CAC 40 0.30% and Germany’s DAX 30 1.14%.

The R2030 government bond was stronger with the yield falling 65 basis points to 10.99%. Bond yields move inversely to their prices.

Despite the Moody’s downgrade, which could result in the outflow of billions of rand from the SA market, investor appetite for SA bonds remained high with the R2030’s bidto-cover ratio, a proxy for investor demand, climbing to 4.45 at this week’s bond auction, from 1.82 previously.