School closures see SA’s main stock index fall to lowest in a week

South African schools closed in late March when the government introduced a nationwide lockdown to slow the pace of Covid-19 infections. The phased re-opening of schools was then initially set to start on 1 June for grades 7 and 12, but as it became clear that many schools were not ready to reopen with new Covid-19 safety measures in place, the official reopening was delayed by another week. With an already fractured education system even before Covid-19 came along, there are many that are concerned that it may collapse entirely the longer we fail to get teachers and learners back to school. On Thursday night, in an urgent address to the nation, President Cyril Ramaphosa‘s announced Cabinet’s decision that all public schools should take a break for the next four week. This decision has been met with criticism. PANDA’s Nick Hudson has openly stated that: “The safest place for children right now is school.” Some of the key reasons for Hudson’s argument is that it will save the economy because parents can get back to work and that lives will be saved down the line to the extent that our economy is actually functioning. While there are certainly risks associated with schools re-opening, there are arguably many good reasons to do it anyway. It seems that this matter may all comes down to the balance of risks. – Nadya Swart

South African stocks slump in risk-off mood; upbeat MTN surges

By Adelaide Changole

(Bloomberg) — South Africa’s main stock index retreats 1.2% to its lowest level in more than a week as of 9:30 a.m. in Johannesburg, after the government closed schools for a second time in the face of rising Covid-19 infections. The equities benchmark is down 1% since Monday, set to decline for the first week in four. MTN Group Ltd. surged after the mobile carrier gave an upbeat assessment of first-half performance.

The announcement on schools came hours after the South African Reserve Bank cut its benchmark interest rate for the fifth time in 2020 and said it sees the economy contracting by 7.3% this year, even more than its previous estimate.

Global risk-off sentiment also took a hit amid rising concern over escalating Sino-U.S. tensions. China on Friday ordered the U.S. to close its consulate in the southern city of Chengdu, in retaliation to Washington’s decision forcing China to leave its mission in Houston earlier this week.Investors are also concerned that recovery in the world’s largest economy has stalled, with U.S. jobless claims rising for the first time since March.

Naspers Ltd., with a 19% weighting on the index, falls 3.1% to provide biggest drag to the index, as partly owned internet giant Tencent Holdings Ltd. retreats in Hong Kong.

  • Gauge of mining stocks falls 1.6%, as diversified miners and gold producers drop
    • BHP Group Plc -0.9%, AngloGold Ashanti Ltd. -3.1%, Anglo American Plc -1.3%, Gold Fields Ltd. -2.6%, Sibanye Stillwater Ltd. -2.7%, Impala Platinum Holdings Ltd. -2.3%, Anglo American Platinum Ltd. -2.1%
  • Index of bank stocks retreats 0.6% as the rand weakens
    • “Rand struggles badly on global risk-off, but EUR/USD gains and the details behind the SARB decision are at least positive,” said Matete Thulare, a Johannesburg-based analyst at Rand Merchant Bank, in a note to clients. “In all, the rand’s appreciation trend has been seriously damaged, and it will take time to resume.”
      • Capitec Bank Holdings Ltd. -1.5%, FirstRand Ltd. -0.3%, Standard Bank Group Ltd. -0.1%, Absa Group Ltd. -0.4%
  • MTN Group Ltd. advances 6.1% to provide biggest boost to the benchmark index, as company says it sees headline earnings for the six months through June at least 195 cents or 100% higher than a year earlier.
  • Foreigners were net sellers of South African stocks Thursday, disposing of 554 million rand worth of shares, according to exchange operator JSE Ltd.
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