The rand fell sharply on Tuesday after third quarter economic growth showed a surprise contraction, underlying the weak state of the economy and growing risk of credit downgrades.
Read: Fourth GDP contraction under Ramaphosa’s watch
Among stocks, retail and fast food firm Taste Holdings plunged 20% after it said group chief executive Dylan Pienaar was stepping down with immediate effect as part of a restructuring plan to exit the food industry and focus on its luxury goods brands.
Read: Taste Holdings loses second CEO this year as focus shifts to luxury
At 1530 GMT, the rand was 0.76% weaker at 14.65 per dollar. Most of the losses came after the gross domestic product (GDP) figures showed a 0.6% contraction as mining, manufacturing and agriculture led a broad based slowdown.
Analysts polled by Reuters had predicted a 0.1% expansion in quarter-on-quarter growth.
The data piles the pressure on President Cyril Ramaphosa as ratings agencies have flagged weak growth as a major risk, while investors are weary of increasing state debt as revenues slide.
Moody’s is the last of the top three agencies to rate the country’s debt at investment level, and it is set to review the rating in March after downgrading the outlook to negative in November.
“All-in-all, these GDP numbers have added to what is turning out to be a fairly bleak year for South Africa, with the country beset again by the lack of growth that’s the root cause of our fiscal challenges,” said Maarten Ackerman, chief economist at investment firm Citadel.
“Government urgently needs to take action and implement the necessary reforms.”
Bonds also weakened, with the yield on the benchmark government issue due in 2026 adding 2.5 basis points to 8.475%.
On the bourse, stocks fell as well after the GDP data.
Local shares were also dragged down by falling emerging market equities after the United States said it would restore tariffs on metal imports from Brazil and Argentina, raising concerns of yet another trade war.
The benchmark JSE Top-40 Index fell 0.64% to 48 299.66 points, while the broader All-Share Index was down 0.6% to 54 485.41 points.
“GDP came in worse than expected so that was certainly negative for the South African-centric stocks on our market,” said Michele Santangelo, portfolio manager for Independent Securities.
Financial services company Discovery fell to the bottom of the blue chip index, down 2.6% to 109.12 rand, while packaging and paper company Mondi PLC was down 2.45% to 311.03 rand.