Fears for JSE as Mandela released

ONE OF the headlines of February 13, 1990 – only two days after Nelson Mandela’s release from 27 years in jail – is startling, though for different reasons today than at the time.

“Honeymoon on SA financial markets over” it declared with customary certainty, suggesting that the new “marriage” was, if not on the rocks, headed for rocky territory; Mandela had managed to wipe no less than R3 billion off share values on the JSE by restating the ANC’s position on nationalisation.

Fortunately, President FW de Klerk’s “reform speech” 10 days earlier had added a whopping R9bn to share values, so perhaps it wasn’t all that bad.

(For the record, real gross fixed capital formation grew from R230bn in 1990 to R638bn in 2015, and inflation fell from 14.4 to 4.6% in the same period.)

Here is that story from February 1990:

Johannesburg. – The brief honeymoon of financial markets with a freed Nelson Mandela came to an abrupt end yesterday when both the Johannesburg Stock Exchange and the financial rand went into a nosedive.

This followed the comments of the released ANC leader on nationalisation of mines, which caused widespread selling by the same overseas investors who just last week were clamouring to get into the market.

About R3 billion was wiped off share values on the JSE yesterday.

Both gold and industrial shares came under heavy selling pressure, with all major indices closing sharply down.

Analysts say the selling pressure mainly emanated from abroad, but was further exacerbated by intense jobbing on the market.

The financial rand’s performance was the most telling of all, since the sharp upward movement of this artificial currency demonstrated the sudden turnabout in overseas investment sentiment.

PICTURE: LEON MULLER Nelson Mandela, flanked by Walter Sisulu, his former wife, Winnie, and Cyril Ramaphosa, reads his famous speech at the Cape Town City Hall after his release from the Victor Verster prison. Row over ancestry allegations