South African Stocks Fall the Most in 16 Months, Retailers Slump

South Africa’s stock gauge fell the most in 16 months, led by retail stocks as the rand plunged to a two-year low and after a slump in commodity prices hurt mining companies.

The FTSE/JSE Africa All Share Index slid 3.2 percent to 30,323.04 by the 5 p.m. close in Johannesburg, its largest retreat since May 2010. The FTSE/JSE Africa General Retailers Index declined 4.1 percent, while the FTSE/JSE Africa Mining Index fell to the lowest in a week, dropping 3.6 percent.

The rand suffered its biggest five-day plunge since 2008, and commodities erased this year’s gains after the U.S. Federal Reserve said the world’s biggest economy faces “downside risks.” Retailers import about 70 percent of their apparel and the rand’s decline will raise costs, Nedbank Capital retail analyst Syd Vianello said. Overseas investors own 66 percent of Truworths International Ltd. (TRU)’s stock and 63 percent of The Foschini Group Ltd. (TFG) and the exit from riskier markets has led to a selloff of these stocks, he said.

“When they exit they exit quickly,” Vianello said by phone. “If the rand carries on tanking you may very well see interest rates going up instead of down. That’s one way to protect your currency.”

The rand retreated 4.6 percent to 8.2749 per dollar, making it the worst performer worldwide among 176 currencies tracked by Bloomberg. Foschini dropped 5.3 percent, the biggest daily fall since April 2009, and Truworths lost 4.1 percent.

Sales, Commodities

South African retail-sales growth accelerated to 2.8 percent in July as interest rates at a 30-year low helped to support consumer spending in Africa’s biggest economy. The central bank kept its benchmark interest rate unchanged at a 30- year low of 5.5 percent today to help support economic growth as the global recovery stalls.

Copper fell to a one-year low in New York and headed into a bear market in London after a China factory index signaling contraction added to speculation of slowing metals demand. Prices in London have dropped 23 percent from the record $10,190 on Feb. 15, qualifying for a bear market if they close at or below $8,152.

Anglo American Plc (AAL), the mining company that makes up about 9 percent of the benchmark stock index, declined to its lowest in more than a week, sliding 4.4 percent. BHP Billiton Ltd. (BHP), the world’s largest mining group, slumped 5.2 percent.

To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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