SA stocks extend record slump as growth outlook dims

South African shares fell, extending a record losing streak, and bonds retreated as the outlook for the continent’s most industrialised economy dimmed with rising joblessness and slowing growth.

The FTSE/JSE Africa All Share Index dropped for an 11th day on Tuesday. The gauge has slumped 4.6% since May 19 as investors debate the timing of US interest-rate increases, damping demand for riskier assets. The declines for domestic bonds drove yields to eight-month highs.

Power shortages are hampering South Africa’s ability to recover from the slowest expansion since the 2009 recession, keeping unemployment at an 11-year high. At the same time, new taxes on gasoline, government wage increases above inflation, the rand’s declines and the prospect of higher electricity tariffs are fueling price gains, increasing the chances of the first interest-rate increase since July 2014.

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“We’ve got a leadership vacuum, no growth and we’re actually going nowhere very fast,” Alec Abraham, a senior equity analyst at Johannesburg-based Sasfin Securities, said. “Investors are starting to really discount emerging markets, and primarily South Africa because it’s just not showing its potential.”

The All-Share index decreased 0.5% to 51,833.04 as of 3.25pm in Johannesburg, paring an earlier decline of as much as 1.4%. A close at that level will be the lowest since March 27 as almost three stocks fell for every one that gained. The measure’s 14-day relative strength index dropped below the 30 level seen as oversold for the first time since Oct. 15. Rand-denominated bonds due December 2026 rose four basis points to 8.30%, the highest since Oct. 3.

Equities have pulled back from a record high on April 24 on speculation the US is moving closer to raising interest rates. The All-Share index is trading at a record premium over the MSCI Emerging Markets Index, based on estimated earnings over the next 12 months, after rallying almost 50% over the prior three years.

SABMiller Plc, that accounts for about 9% of the index, fell 0.7%. Naspers Ltd. retreated 0.7%, while British American Tobacco Plc dropped 1.8 percent

Growth in the continent’s largest economy after Nigeria slowed to an annualised 1.3% in the first quarter from 4.1% in the previous three months, the statistics office said on May 26. The unemployment rate climbed to 26.4% from 24.3%, Statistics South Africa said.

- Bloomberg