Banks slump 5% on ‘Zuma factor’

The pressure on South African banking stocks has intensified, following the late night axing of Pravin Gordhan as finance minister.

The domestic banking index gave up more than 5% shortly after the market opened, in what has been described as a knee-jerk reaction to news that Gordhan and his former deputy Mcebisi Jonas would be replaced by Home Affairs Minister Malusi Gigaba and ANC lawmaker Sfiso Buthelezi.

At midday, shares in Nedbank, Standard Bank, RMB and FirstRand traded more than 5% lower.

Barclay’s Africa gave up 4.13% and shares in Capitec declined by 3.8%.

However, banking stocks are holding up relatively well when compared with the reaction to President Jacob Zuma’s shock firing of former finance minister Nhlanhla Nene in December 2015, says Simon Brown, founder of Just One Lap.

“Nene’s firing was a bolt from the blue, this time we expected it. No sane person, probably not even Pravin Gordhan, expected him to remain in his position.

“It’s almost as we have become immune to politics. There were three major events in 12 months – Nene being fired in December 2015, Brexit and Trump – and with each one the smell of fear in the market has become less and less,” he said.

Shares in domestic banks have been under pressure since Monday.

Nene’s firing was a bolt from the blue, this time we expected it

Simon Brown Founder of Just One Lap