Pravingate’s slow puncture – losses getting ever closer to Nenegate

By Alec Hogg

After encouragement from Friday’s #ZumaMustFall protests in SA and Saturday’s London edition outside South Africa House, I did an update on the cost of Zuma’s midnight reshuffle to SA. Unlike Nenegate, the latest blunder has been like a slow puncture where the air slowly escapes.

The share prices of 17 interest-rate sensitive stocks among the JSE’s Top 40, SA’s major banks and property companies, have kept falling. By Friday’s close they were down an average of 10% having lost a combined R188bn in market value in the past two weeks.

It’s a similar story with SA bonds where the 10 year yield has steadily risen since Pravingate. It has gone from 8.3% before the shock roadshow recall to 9% now. That translates into a capital loss of over R100bn for those who own the bonds – mostly SA retirement funds.

After Nenegate, those same 17 stocks lost R290bn and bonds R250bn in two sessions. But they started recovering after Gordhan’s weekend appointment. This time, selling keeps growing with no sign of a rebound in sight. For any rational leader, falling asset values and higher interest rates ring very loud alarm bells. But that’s a luxury SA doesn’t possess right now.

Pravin Gordhan, former South African finance minister, right, speaks as Mcebisi Jonas, former South African deputy finance minister, left, looks on during a news conference in Pretoria, South Africa, on Friday, March 31, 2017. Photographer: Waldo Swiegers/Bloomberg
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