UPDATE 1-South African shares spooked by lacklustre budget, global sell off

(Adds latest figures, analyst comments)

JOHANNESBURG, Oct 28 (Reuters) – The Johannesburg Stock Exchange (JSE) witnessed a bloodbath on Wednesday as investors feared a repeat of the mayhem in March as Finance Minister Tito Mboweni’s lacklustre budget coincided with a global meltdown of stock markets.

The benchmark all share index tanked 3.28%, its biggest single day slump since the market crash of March and pushing it down to levels seen in June.

The finance minister presented a mid-term budget on Wednesday pledging to freeze public wage bill for three years to avert a looming debt crisis and allocating a 10.5 billion rand ($649.66 million) bailout of state-owned beleaguered airline South African Airways (SAA).

Analysts and traders said a massive aid to SAA and no clear roadmap on how the country will avert a fiscal deficit catastrophe pulled down an already bruised market.

“SA interim budget today is another scandal that we’ve just become numb to,” Russell Lamberti, founder of ETM Macro Advisors, an analysis and strategy advisory firm, said on Twitter.

The bluechip top 40 companies’ index plunged by 3.29%, pulled down by a broad-based rout which saw the bank and mining indices and sink by 4.5% each.

The budget came at a day when a barrage of negative news was already sending shock waves globally signalling that a lockdown in Germany and France could mean economic recovery is no where in sight.

“Germany is the gold standard. If Germany is going into lockdown, means Europe is gone,” said Greg Davies, Head of Wealth, Cratos Capital, a boutique investment firm.

Investors are selling off fearing another March crash is coming as the South African economy continues to struggle just like it was in March when the fist wave of coronavirus was unfolding, he added.

South Africa’s rand slipped to a one-week low and bonds also weakened on Wednesday.

At 1500 GMT, the rand was 0.85% weaker at 16.3450 per dollar, having sunk to a fresh one-week low of 16.4775 soon after the budget speech. Bonds also reacted negatively to the speech, with the yield on the benchmark 2030 paper rising 7 basis points to 9.32%.

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