SA stocks slide for second day after IMF cuts growth forecasts

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The Ninety One SA Recovery Fund in association with Ethos Private Equity aims to raise R10bn.
The Ninety One SA Recovery Fund in association with Ethos Private Equity aims to raise R10bn.

The Johannesburg Stock Exchange index extended declines for a second day, falling 0.2%, amid weakness in BHP and Anglo American [JSE:AGL] as fellow benchmark heavyweights Naspers [JSE:NPN] and Richemont [JSE:CFR] dropped.

The four stocks account for 48% of the gauge by value.

Wednesday’s weakness came after the International Monetary Fund cut South Africa’s growth forecasts, even as it raised its projection for global expansion. Stock markets are mostly treading water near record highs as investors seek more clarity on the timeline for President Joe Biden’s $1.9 trillion Covid-19 relief plan, and awaiting the Federal Reserve monetary policy decision later Wednesday.

“Global stocks are likely to trade sideways today as market participants weigh the IMF’s upward revisions to the global growth outlook against hurdles to further economic stimulus, while caution is likely to prevail ahead of the Fed’s policy statement,” Mpho Molopyane, a Johannesburg-based economist at FirstRand’s [JSE:FSR] Rand Merchant Bank, said in a note to clients.

“Expectations are that the Fed will keep to its accommodative stance to aid with the economic recovery.”

An index of mining stocks retreated for a fourth consecutive session, down 0.7% to the lowest since January 6 as China’s commitment to cutting steel production this year dragged on iron ore prices, and as platinum prices retreated.

  • BHP -1.1% to cause the biggest drag on the FTSE/JSE Africa All Share Index. Anglo American -0.9%, Exxaro Resources [JSE:EXX] -1.2%, Glencore [JSE:GLN] -1.8%, African Rainbow Minerals -0.7% [JSE:ARI].

Platinum companies declined for a fourth session, the longest losing streak since October 30

  • Sibanye Stillwater -0.8%, Northam Platinum [JSE:NHM] -0.4%

Richemont extended declines to a the third day. Meanwhile Naspers erased gains of as much as 0.6% to fall 0.4%.

Vodacom Group [JSE:VOD] dropped 0.6% as parent Vodafone Group considers options for its Ghana business as it focuses on reorganizing the group and paying down debt.

Rand weakness drags index of bank stocks lower.

  • Standard Bank [JSE:SBK] -0.5%, FirstRand -0.2%, Absa Group -0.5%, Nedbank Group [JSE:NED] -0.4%, Investec [JSE:INL] -0.3%
  • Industrials retreat 0.4%

    Weak rand also pulls financials down 0.4%

    • Remgro [JSE:REM] -0.9%, Ninety One -3.4%, Quilter -0.5%, PSG Konsult [JSE:KST] -3.8%, Transaction Capital -1% [JSE:TCP].
  • General retailers retreat 0.6%
    • Foschini Group [JSE:TFG] -1.4%, Woolworths Holdings [JSE:WHL] -0.9%, Mr Price Group -0.5%, Massmart [JSE:MSM] -2%, Truworths International [JSE:TRU]. -0.5%
  • Foreigners remained net sellers of South African stocks for a fourth consecutive day Tuesday, disposing of R1.05 billion worth of shares, according to exchange operator JSE. That’s the largest outflow since the year started.
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