Stocks, rand sharply lower after weak China data

Blue-chip index skids to biggest daily fall in three weeks.

South African stocks fell sharply and the rand tumbled over one percent against the dollar on Tuesday, dragged lower by data showing manufacturing activity in China contracted at its fastest pace in three years.

Investors offloaded everything on the blue-chip JSE Top-40 index, which logged its biggest daily percentage decline in nearly three weeks, while the rand slipped to a one-week low.

The benchmark Top-40 index ended 3.09% lower at 42,979 points and the All-share index, the broadest measure of the South African stock market performance, lost 2.92% to 48,515 points.

“Even though China put in measures to shore up the economy, it doesn’t seem to be helping the situation,” said Ferdi Heyneke, a fund manager at Afrifocus Securities. “The recovery was fragile and there’s still a lot volatility.”

Miners were among the biggest fallers after the weak data from China reinforced fears about demand for commodities, with Anglo American down 5.18% to R139.24, Impala Platinum 4.32% softer to R47.38 and Anglo American Platinum 2.39% down to R312.53.

Retailer Mr Price dropped 13.25% to R207.01 – its biggest daily drop since 2001 – after the no-frills clothes seller said 21-week sales growth was hit by weak consumer spending.

At 1605 GMT the rand had fallen 1.04% to 13.4180 per dollar, its weakest level since it hit an all-time low of 14.00 last Monday, unable to shake-off waning risk sentiment.

Economists warned that US jobs data due to be released on Friday were positive, it would support a early rate hike by the United States’ Federal Reserve, which could further strain the local currency.

“The rand will continue to take its cues from broader emerging market sentiment as we move further into the US jobs week,” analysts at NKC African Economics said.

Yields on government bonds were lower, with the benchmark paper due in 2026 down 0.5 basis points.

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