Shares in JSE-listed firms that depend on tourism and hospitality showed a mixed reaction on Monday to the extension of the level 4 lockdown by two weeks.
Surging Covid-19 numbers, particularly in Gauteng, prompted expectations of further lockdowns, but the rand also came under pressure as political violence flared in the wake of former president Jacob Zuma’s imprisonment.
Hotel operator Sun International was up 8.11% to R20. Tsogo Sun Hotels gained 3.28% to R2.83 and Tsogo Sun Gaming 4.54% to R8.29. Liquor maker Distell gained 0.71% to R166.92.
Drikus Combrinck, CEO at Capicraft Investment Partners, said an extension of the lockdown was generally expected in the market, while relaxations of conditions — such as allowing restaurants to reopen for dine-ins — would help somewhat.
President Cyril Ramaphosa announced on Sunday night that the ban on alcohol sales will be extended until July 26 as the government grapples with the recent surge in Covid-19 infections. However, restrictions have been eased, including on sit-in dining, though operators are restricted to less than 50% capacity.
The liquor industry has appealed for restrictions on alcohol sales to be partially lifted, while SA Breweries has gone to court, arguing there is no scientific evidence that banning alcohol sales reduces the number of Covid-19 infections.
The JSE Leisure and Tourism index was up 5.13% on Monday, its biggest one-day gain since November 9.
Combrinck said this was largely due to positive effects on rand hedge stocks such as Naspers, which came under pressure last week due to China’s regulatory moves against tech firms.
SA’s market was under pressure from the violence, which was televised across the world, because of the effect it will have on business and consumer confidence, he said. “Nobody wants to open a business when it is going to be looted.”
Riskier assets came under pressure last week as investors considered the rising threat of the Delta variant of Covid-19, which has led to restrictions, including the prohibition of spectators at the Tokyo Olympics.
The all share index has still risen about 11.5% so far in 2021. Along with global markets, it has been boosted by the prospects of a global economic recovery as vaccine programmes gain momentum.
Robust pricing for commodities, such as iron ore, has supported miners, with Anglo American up about 20% in the year to date, while BHP has risen about 15%.
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