Retail stocks were back in negative territory on Thursday after recovering some lost ground the day before as the country began to count the cost of the violence that erupted at the weekend.
Economic activity remains subdued in the wake of days of looting and vandalism in which hundreds of businesses in Gauteng and KwaZulu-Natal were damaged or destroyed.
Preliminary estimates put the cost of the damage and destruction of property at about R10bn, which has the potential to derail a recovery in the economy that is still suffering from the fallout of the Covid-19 pandemic.
“The momentum of the social unrest is lessening as a greater military contingent is deployed,” said Nema Ramkhelawan-Bhana, head of global markets research at RMB. “There are still accounts of sporadic looting in the critical economic hubs of Gauteng and KwaZulu-Natal. The impact is widespread and we have no discernible evidence as to the long-term effect on society or the economy, given that this is an unprecedented circumstance,” she added.
“Fuel is an obvious concern but the SA petroleum industry has determined that there are, for now, sufficient fuel stocks to keep the country supplied. The primary concern is the actual distribution thereof, especially if the unrest persists,” Ramkhelawan-Bhana said.
The JSE all share lost 0.53% to 67,538 points and the top 40 0.51%. Retailers fell 1.84% and resources 1.24%.
Sasol was the biggest loser in the resources index. The chemicals and synthetic fuel producer was also the worst performer overall, falling 7.75% to R214.50 — the most since November 2020.
The government earlier banned the use of containers for petrol and diesel to thwart hoarding of fuel amid fears of shortages.
Steinhoff led the losses in the retail sector and was down 5.39% to R1.58. Pepkor shed 3.3% to R19.22, Truworths 2.55% to R58.51, Mr Price 2.31% to R201.94 and TFG 1.44% to R156.19.
Global sentiment was also under pressure on Thursday as the ongoing risk of the third wave of Covid-19 infections threatens the pace of global economic recovery.
“The rising number of Covid-19 cases is reminding the markets that Covid-19 remains a risk, despite successful vaccination programmes in some countries,” said Oanda market analyst Sophie Griffiths. “As such, fears are driving a rotation out of cyclicals — stocks that are more closely linked to the health of the economy.”
London’s FTSE 100 fell 1.12%, France’s CAC 40 0.99% and Germany’s DAX 30 1.01%.
At 6.20pm, the rand was 0.45% weaker at R14.5643/$, 0.17% to R17.1882/€ and 0.44% to R20.1406/£. The euro was 0.29% weaker at $1.1803.
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