STOCKS AND MARKETS

THE RAND tumbled more than 1 percent yesterday after data showed the economy contracted sharply in the second quarter due to coronavirus restrictions, rattling already fragile investor sentiment and upping expectations of reforms.

At 4.30pm, the rand was down 1.3 percent at R16.97 to the dollar, most of the losses coming after statistics showed the South African economy shrank 51 percent in the second quarter, its fourth consecutive quarterly contraction. By 5pm the local currency had recovered somewhat to bid at R16.90 to the grdeenback.

“The GDP print might be a good incentive for the South African authorities to continue to push on with the well-needed reforms,” said Vladimir Demishev, a senior fixed income specialist at Sova Capital.

The economic slowdown was broad-based. Mining declined 73.1 percent, manufacturing fell 74.9 percent and construction shrank 76.6 percent.

“Of far greater concern is the fact that South Africa was already battling a recession before the pandemic hit, meaning that the virus may finally have tipped the economy over the edge into a depression,” said Maarten Ackerman, chief economist at Citadel.

It was the first time in the history of the data that growth had shrunk for four consecutive quarters, according to the stats agency.

Bonds also suffered, with the demand falling at the government auction of long-dated bonds earlier.

Stocks were largely flat, with the all share index inching up 0.07 percent to 54 438.82 points while the Top40 index was unchanged at 50 182.96 points.

Supermarket chain Shoprite jumped 10.81 percent to R129 after it reported record sales of R156.9 billion, up 6.4 percent for the year ended June 28, with like-for-like sales up 4.4 percent. I Reuters