South Africa Stocks Fall as Tax Prospects Raise Spending Concern

South African shares fell a second day on speculation that prospects for higher taxes will curb consumer spending in an economy already set to grow at the slowest pace since the 2009 recession.

The FTSE/JSE All Share Index fell as much as 1.6 percent before closing 0.2 percent lower at 48,104.66 in Johannesburg. The bourse is down 7.9 percent since closing at a record high on July 29. MTN Group Ltd. and Pick n Pay Stores Ltd. were among 71 decliners on the 165-member gauge.

South Africa will sacrifice economic growth the next two years to curb debt as it plans 27 billion rand ($2.5 billion) of “structural increases” in revenue in the period, the National Treasury said in the mid-term budget released in Cape Town yesterday.

Tax increases are one of the options being considered, Director-General Lungisa Fuzile said. The economy will probably expand 1.4 percent this year, the Treasury said.

“The circumstances don’t justify a major collapse in the market,” Wayne McCurrie, a Johannesburg-based money manager at Momentum Asset Management, said by phone today. “Certainly we are going to get more weakness.”

MTN, Africa’s largest wireless operator, retreated 3.8 percent to 235.03 rand after the company said quarterly performance was hit by aggressive competition and stringent regulations. Pick n Pay, which runs a chain of grocery stores, fell 0.7 percent to 51.04 rand, with trading volume 2.2 times the three-month daily average.

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