Global shares, oil buckle under viral threat

As the Saudis and Russians embark on an oil price standoff, importers such as South Africa may benefit. If the economy holds up.

- Jaco Visser

The South African stock and bond market, together with the rand, showed their fragility as panic about the coronavirus, or Covid-19, gripped investors across the globe.

By 10 March the FTSE/JSE All Share Index slumped by almost 11.8% since the beginning of the year, whereas the rand slid by more than 11.7%. Over the weekend of 6 to 9 March, the currency fell from R15.67 to as low as R16.97 – its weakest level in almost five years – before retracing to R16.24 as the markets opened on Monday 9 March.

The rand’s slump followed a net selloff of R3.6bn in locally-listed stocks by foreign sellers on Friday 6 March, data from the JSE shows. Foreigners sold net R2.4bn in bonds on the same Friday, a spokesperson for the JSE confirmed.

Jitters about the local market came on the back of the enormous shift from risky assets to safe-haven assets in developed markets.

“The weaker rand experienced in early March was a function of global factors, rather than being SA specific,” Etienne Roux, equity analyst at Truffle Asset Management, told finweek. “Markets are currently in a risk-off phase, which generally results in emerging-market assets, and currencies, being sold down as investors switch to safe-haven assets such as the dollar and gold.”