Registered users can save articles to their personal articles list. Login here or sign up here

10 worst performers tell tale of battling economy

One ray of hope is the soaring palladium price.

It’s not even the end of the first quarter and already there’s a plethora of once-significant South African companies that have either collapsed or had their share prices hit the wall.

The likes of sugar producer Tongaat Hulett, tech provider EOH Holdings, Blue Label Telecoms and Aspen Pharmacare have lost billions in value, sending tremors through a South African market that was still reeling from the shock of retailer Steinhoff International’s more than 90% plunge since December 2017. The latest in the sorry line-up was construction company Group Five, which went into administration on Tuesday after running out of funding.

Read: The final big mistake that sank Group Five

Aspen: are the execs drinking their own Kool-Aid?

While property and construction have suffered some of the worst declines this year, the malaise isn’t limited to those industries. From technology to telecommunications, retailers, consumer goods, agriculture, education and financial services, South African companies are battling with crippling unemployment levels, plummeting business confidence, instances of corporate malfeasance and a lifeless economy that expanded just 0.8% last year.

And it’s not just about economic indicators. The property firms? There’s deep uncertainty about land rights in South Africa as President Cyril Ramaphosa moves toward changing the law to clarify when the state can expropriate land without compensation. For construction companies? Years of mismanagement, corruption and under-spending on state infrastructure have left builders without enough things to build. In the background, of course, there are consumers who are shopping less and straining under increased taxes.

South Africa’s economy is forecast to expand 1.7% this year, according to the central bank and National Treasury, but that figure was produced before higher-than-estimated tariff increases were announced for cash-strapped power utility Eskom.

One ray of hope is the soaring palladium price. That’s caused the shares of companies such as Impala Platinum, Lonmin and Anglo American Platinum to outperform most stocks on the 165-member FTSE/JSE Africa All Share Index this year. It’s just a shame that the mining industry in South Africa, once the world’s biggest gold producer, makes up less than 10% of the country’s gross domestic product these days.

While the mining counters have helped the Johannesburg bourse climb more than 5 percent this year, that’s less than the gains by exchanges from New York to London, Tokyo and Hong Kong. There’s an adage in Afrikaans, one of South Africa’s languages, that says “local is lekker,” meaning home is great, but so far this year, local isn’t very lekker at all.

© 2019 Bloomberg L.P

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.


To comment, you must be registered and logged in.


Don't have an account?
Sign up for FREE

If the economy expands 1.7% this then I will eat my hat or Stats SA is dishonest

Stats SA is not to be trusted as its been proven over and over again. Look at their unemployment rate reported. There was an article citing a much higher just for unemployment rate proving their data is invalid and probably due to them having to be politically correct. Just like CR told trump he is misinformed about farm murders. Check this link and look at whats really happening in SA.

A decade of ZUMA economic damage, will have long-term consequences, like we are seeing the past few years, and the momentum will continue. But for how long?

Textbook socialism at play here.

The globe is going for it’s longest period of expansion in 100 years, commodity prices are running high. Australia, Chile and most countries similar to SA have been booming for years on end.

South Africa barely afloat and sinking into lost years of recession.

Never forget and teach your children a 1000 times over the story of how nations rise and fall.

Load All 4 Comments
End of comments.





Follow us:

Search Articles:Advanced Search
Click a Company: