E JSE Crashes To Same Level As In 2015 Due To Coronavirus Panic

The JSE’s wider All Share Index experienced some of its worst results in two months last Monday, finishing 4% lower on the day to 54 882 points. Resource stocks fared the worst, while the value of the Rand depreciated above the critical level of R15 against the US dollar.

The troubling performance on the JSE is a result of rising fears over the impact of global trade on the South African economy, which has been struggling to gain momentum in the midst of a volatile political environment and a stuttering Rand.

Resource companies in particular export to China, a leading economy whose demand typically sets the price for commodities. Included in the resource stocks which took a hit on the JSE were Sibanye-Stillwater (down 11.2%); iron ore, manganese and chrome producer Assore (10.9%); Anglo American Platinum (ANGPY) (down 8.5%); Anglo American (NGLOY) (down 8.4%); and Impala Platinum (IMPUF) (8.3%).

The price of crude oil futures, a key player in the South African economy, fell by $2 a barrel as investors expect demand for oil to fall. However, gold prices have soured as investors retreat to the more stable ground which this commodity offers. Solid gains were recorded for Harmony Gold (HGMCF), which grew by 7.1% to close at R59.30, Gold Fields, which gained 6.47% to close at R113.61, and AngloGold Ashanti which soared by 6.56% to close at R338.00 following the release of its half-year results.

Despite the growing uncertainty surrounding the spread of the disease, there remains a silver lining in the darkening coronavirus cloud. While global markets have displayed their typical panic at any economic volatility (one need only recall the mood surrounding the SARS virus outbreak) international investor Warren Buffet believes that the virus’ impact on the global economy can yield positive returns for those who consider short-selling strategies.

Speaking on a CNBC interview on Monday, Buffet said, ‘Who wouldn’t rather buy at a lower price than a higher price? [Investors] should want the stock market to go down, they should want to buy at a lower price.’

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Louis Schoeman 2 months ago Author's comment

Hi Ed.

South Africa has some serious social and economic issues which I believe will even push the JSE price down even further. ( Hold on before you buy THIS dip )

To name just 3 huge issues: Expropriation without compensation of any one's property, ( being debated in parliament as we speak ) - PROPERTY RIGHTS are under attack, in short.

Eskom ( South Africa's National Electricity provider ) cant provide enough electricity for the country with daily electricity blackouts. This has caused monumental damage to the South African economy as we are officially in a recession again. Foreign direct investment has significantly decreased in the last 4 years because of unstable or enough electricity supply.

.....and lastly prescribed assets for private and government pension funds to fund bankrupt for state-owned enterprises.

It is a circus at the moment in Africa's 2nd biggest economy.

You will see a bigger dip to buy soon..

Beating Buffett 2 months ago Member's comment

These difficult times of #COVID-19 present more than just shorting opportunities. That are plenty of business that this tragedy has given a boost to. From pharma companies working on a vaccine, to online supermarkets and other suppliers, corporate video conferencing solutions, makers of cleaning supplies and protective gear, etc.

Alexis Renault 2 months ago Member's comment

Seems cruel to view the #coronavirus as a way to profit when so many are falling ill or dying. Reminds me of those who made money by shorting on 9/11.

Flat Broke 2 months ago Member's comment

True, you can never lose following the simple mantra, "but low, sell high."