South Africa’s top five banks by market value have shed more than R200bn since the breakout of conflict in the Middle East, with the Public Investment Corporation (PIC) hardest hit due to its big exposure to the sector.
FirstRand, the country’s largest lender by assets, has lost more than R52bn of its value while Standard Bank is down R50bn, Capitec R53bn, Absa R30bn and Nedbank R22bn — underlining the effect the war is having on defensive South African stocks.
The plunge in the value of South African lenders resembles the early days of the Covid-19 pandemic.
The carnage in the value of the country’s banking supermajors, who control more than 90% of the industry’s multi-trillion assets, comes as fears that a prolonged conflict in the Middle East, a key region in the global oil supply, will lead to a rise in inflation as crude prices surge.
The rand has also depreciated markedly since the first missiles landed in Iran’s capital, Tehran, killing the country’s supreme leader, Ali Hosseini Khamenei, and sparking a regional conflict, interrupting oil supply.
The South African Reserve Bank has previously guided that a 10% depreciation in the rand typically has a more immediate and pronounced effect on South Africa’s inflation than a comparable rise in crude oil prices.
The higher oil price, which is likely to cause surging fuel prices, is also expected to increase food prices, presenting a double whammy for consumers, who will have less to spend and whose ability to pay debt obligations to banks will be constrained.
The fall in the market value of the banking groups also presents an opportunity for opportunistic investors looking to buy and invest in quality assets cheaply.
The country’s four largest insurance groups, Sanlam, Discovery, Old Mutual and Momentum, have not been spared the carnage, shedding more than R40bn in value in the period.
Anchor Capital co-chief investment officer Nolan Wapenaar said that while the present environment may prove uncomfortable, it does not yet resemble a systemic crisis.
‘Better prepared’
He said South Africa has entered this period with stronger fiscal buffers and a more stable macro framework than during previous shocks.
“While the dominant narrative has focused on the risks to South Africa and leaned toward alarm, the full picture may be more nuanced. Looking at the rand, we note that despite the war-driven sell-off, the currency remains stronger than where it ended 2025 and the exchange rate is also significantly firmer than the R17.84/$ average across last year,” Wapenaar said.
“This suggests the move is more a correction than a structural collapse in the currency. The distinction matters because South Africa’s monthly fuel price adjustment uses an average of daily international petroleum prices and exchange rates across a full month. It is not calculated on intraday panic peaks. If current levels persist, petrol prices could rise by about R6/l and diesel by about R8/l in April.
“While these numbers may be quite large, they come from a historically low base (petrol was at about a four-year low of about R20/l a few weeks ago). Even after the Iran war shock, it would still be at prices considered unremarkable two to three years ago. So, the genuine risk is the duration of the spike rather than the initial spike itself. A one-month oil shock is absorbed, while a six-month shock can reshape inflation expectations and force the Reserve Banks’s hand.”
The JSE all share index, the broadest measure of the South African stock market performance, lost further ground on Wednesday, closing the trading session 1.85% weaker, with resources stocks having a horror show.
Harmony Gold led the losses, shedding more than R22bn of its value on the day. Gold Fields gave up R44bn and Sibanye about R8bn.
The JSE’s poor start to March, based on the Middle East conflict, erases gains made in February, when the all share index rose 7%, led by the resources sector as stronger commodity prices boosted mining stocks. Financials and listed property also contributed positively to last month’s performance.
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