South African stocks slid as much as 5% and the rand fell 2% versus the dollar on Monday as fears about Europe’s financial sector hit equity markets and the euro, while weaker metal prices pounded miners.
The Top-40 index of blue-chip stocks clawed back some losses to trade 3,65% lower to 19 768,11 points by 07.21am GMT, while the all-share index fell 3,47% to 21 891,85 points.
”Friday’s sell-off on Wall Street filtered through to markets around the world, and now we’re taking a hammering,” said Andrew Todd, an equities trader at BOE Private Clients.
”It’s concerns over global growth and the credit crisis — plus we’ve got falling commodity prices putting a lot of pressure on our miners. These concerns are going to be with us for some time.”
The rand extended losses against the dollar to as much as 2,3%, hitting new near-six-year lows as it tracked sharp losses by the euro, and as investors dumped currencies perceived as risky.
”It’s all risk aversion and unwinding of carry-trades,” a Johannesburg trader said. ”If you look at all the carry currencies, they have all been smacked. There’s absolute carnage out there.”
A reversal of risk appetite normally sees investors unwinding carry-trades, in which they would have used low-yielding currencies like the yen to fund purchases of high-yielding assets like those denominated in the rand.
Miners were among the biggest losers on the stock market as gold slumped on the back of falling oil prices and a firmer dollar, while platinum tumbled to its lowest level in almost three years on demand fears.
Anglo American dropped almost 4% while BHP Billiton slid 6%. Anglo Platinum tumbled 5%, Implats tripped 4,5% lower and Lonmin fell more than 7%.
The South African arm of global steel giant ArcelorMittal careered more than 11% lower.
Sasol fell almost 5% on weaker oil prices and after it said on Friday it would make provisions for a €318,2-million fine imposed by the European Commission for its part in fixing paraffin wax prices. – Thomson Reuters