South African stocks fell the most in a month after the nation’s largest provider of unsecured credit said high levels of consumer indebtedness is slowing demand and causing more loans to sour.
The 166-member FTSE/JSE Africa All-Share Index declined 0.8 percent, the biggest decrease since April 17. The six-member FTSE/JSE Africa Banks Index slid 3.1 percent to the lowest level since Dec. 6, with Absa Group Ltd., majority controlled by London-based Barclays Plc, leading the losers. The FTSE/JSE Africa General Retailers Index decreased 4.2 percent as Truworths International Ltd. retreated the most since November 2008.
African Bank Investments Ltd. slipped 17 percent to 17.40 rand, an eight-year low. The lender, which also owns a furniture retailer, wrote-off 445 million rand ($47 million) of bad loans and cut its first-half dividend by 71 percent, saying collections will be difficult for the rest of its fiscal year.
“The results highlight what the market fears: the consumer slowdown continues, and, in fact, it gathers pace,” Ryan Wibberley, a Cape Town-based trader at Investec Asset Management, said in an e-mailed response to questions.
Consumers in Africa’s largest economy are under pressure from sluggish economic growth, estimated at 2.6 percent this year by the central bank, and an unemployment rate of 25.2 percent. Investors are betting there is a 50 percent chance that Reserve Bank Governor Gill Marcus will cut the benchmark interest rate, which is at a 30-year low, on Thursday to boost consumption, according to Standard Bank Group Ltd. estimates.
Capitec Bank Holdings Ltd., the second-largest unsecured lender, dropped 3.5 percent to 193 rand, a two-month low. Absa slid 5 percent, the biggest one-day loss in almost a year, to 145.20 rand. Standard Bank Group Ltd., the continent’s largest lender, declined 3.2 percent to 110.18 rand.
“Pretty much anything consumer-related is under severe pressure,” Wibberley said. Nine out of the 11 stocks on the general retailers index declined.
JD Group Ltd., the largest publicly traded furniture retailer, slid 5.5 percent to 31 rand, its lowest closing price since March 2009. Truworths, the country’s biggest listed clothing retailer, slipped 6.3 percent to 86.44 rand, the lowest level in a year.