South African rand, stocks slide after GDP shrinks
(Adds latest prices, analyst comments)
JOHANNESBURG, Dec 3 (Reuters) - South Africa's rand fell
sharply on Tuesday after third quarter economic growth showed a
surprise contraction, underlying the weak state of the economy
and growing risk of credit downgrades.
Among stocks, retail and fast food firm Taste Holdings
plunged 20% after it said group chief executive Dylan
Pienaar was stepping down with immediate effect as part of a
restructuring plan to exit the food industry and focus on its
luxury goods brands.
At 1530 GMT, the rand was 0.76% weaker at 14.6500
per dollar. Most of the losses came after the gross domestic
product (GDP) figures showed a 0.6% contraction as mining,
manufacturing and agriculture led a broad based
Analysts polled by Reuters had predicted a 0.1% expansion in
The data piles the pressure on President Cyril Ramaphosa as
ratings agencies have flagged weak growth as a major risk, while
investors are weary of increasing state debt as revenues slide.
Moody’s is the last of the top three agencies to rate the
country’s debt at investment level, and it is set to review the
rating in March after downgrading the outlook to negative in
"All-in-all, these GDP numbers have added to what is turning
out to be a fairly bleak year for South Africa, with the country
beset again by the lack of growth that's the root cause of our
fiscal challenges," said Maarten Ackerman, chief economist at
investment firm Citadel.
"Government urgently needs to take action and implement the
Bonds also weakened, with the yield on the benchmark
government issue due in 2026 adding 2.5 basis points
On the bourse, stocks fell as well after the GDP data.
Local shares were also dragged down by falling emerging
market equities after the United States said it would restore
tariffs on metal imports from Brazil and Argentina, raising
concerns of yet another trade war.
The benchmark JSE Top-40 Index fell 0.64% to
48,299.66 points, while the broader All-Share Index was down
0.6% to 54,485.41 points.
"GDP came in worse than expected so that was certainly
negative for the South African-centric stocks on our market,"
said Michele Santangelo, portfolio manager for Independent
Financial services company Discovery fell to the
bottom of the blue chip index, down 2.6% to 109.12 rand, while
packaging and paper company Mondi PLC was down 2.45% to
(Reporting by Mfuneko Toyana and Naledi Mashishi; Additional
reporting by Kara van der Berg; Editing by Mark Potter)
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