Coronavirus lockdown: JSE plunge ‘worst on record’, global economy in crisis; Naspers; Sun International; Domino’s Pizza

By Jackie Cameron

  • South Africa’s benchmark stock index plummeted the most on record after President Cyril Ramaphosa’s declaration of a national state of disaster over the coronavirus outbreak, reports Bloomberg. The president announced tough measures Sunday to stem the spread of the virus locally, including halting flights and shutting schools, and said the government was finalizing a crisis package.
  • The SA economy is set to shrink. Already beleaguered tourism companies and exporters are among those whose survival is on the line, reports Bloomberg. Economists including BNP Baribas’s Jeffrey Schultz are forecasting a contraction in gross domestic product this year, a far cry from the government’s forecast of 0.9% growth. “South Africa’s growth woes look set to worsen in the next few quarters,” Schultz and strategist Burak Baskurt said in emailed comments even before the announcement by Ramaphosa. Naspers, South Africa’s biggest stock, fell 13% to weigh most on the overall market, says Bloomberg, while heavyweight Richemont declined 12%. Just two of the benchmark’s 158 members were higher as of 3:19pm. The index’s 30-day price volatility rose to 51% on Monday, the highest since the global financial crisis of 2008, says the news service.
  • World economies are facing their biggest challenge since the great recession, warn economists, with airlines set to go bust by the end of May unless governments intervene. Andrew Sheets, Morgan Stanley’s London-based chief cross-asset strategist, describes the current shocks washing through global financial markets, according to Bloomberg. In a note on, he said: “Low rates don’t solve a shortage of semiconductors if a factory needs to shut down. A tax cut won’t show up as spending if consumers don’t have confidence in the broader public health response.” It already seems clear, say Bloomberg analysts, that Friday’s rally was not the turning point that some emerging-market investors hoped for. Nor will the US Federal Reserve’s emergency rate cut on Sunday night be enough to reverse what’s the fastest collapse in risk assets in more than a generation. “While governments increase efforts to slow the spread of the coronavirus, stimulus measures could be too late to prevent a global recession, with businesses suffering from both supply and demand shocks.” The MSCI Emerging Markets Index of equities fell 4.6% on Monday, it reports.
  • Airlines worldwide will shrink operations to only a trickle of flights, severing global links and putting hundreds of thousands of jobs at risk as they fight to preserve cash and survive the coronavirus pandemic. British Airways owner IAG SA will slash capacity for April and May by at least 75% amid the collapse in demand and government restrictions aimed at slowing the disease. Partner American Airlines Group will cut international long-haul flights by the same degree in the biggest reductions by a US carrier. Ryanair Holdings and Air France-KLM announced even deeper cuts at 80% and 90% respectively, and the Irish firm said its entire fleet may be grounded. Paris’s two biggest airports plan to shutter terminals as travel hubs stand almost empty, while TUI AG, the largest vacation firm, will suspend the bulk of its hotel and cruise-ship operations. The actions reflect mounting fears that Covid-19 threatens the survival of even healthy travel companies as people stay home and the disease wipes out economic growth.
  • South African hotel and casino operator Sun International is already handling cancellation of conference bookings and events by clients, CEO Anthony Leeming said on Monday, as companies rush to contain the spread of the coronavirus. “With travel restrictions we’ve definitely lost all international business and conference group bookings are cancelling left right and centre,” he is reported as saying. “With the President’s announcement, we’re going to have all conferencing cancelled for the next couple of months. So that’s the real impact on the hospitality side.” Events such as music concerts that are usually held at its Times Square arena and Sun City resort have also been called off, continues Bloomberg. On the casino side, Sun International has not yet seen a significant slow down in foot traffic but Leeming expects “a little bit of slowdown” as people avoid going out.
  • More than 80 Domino’s Pizza outlets will be closed after its holding company failed to find a buyer.