Bank, Retail Stocks in Focus as South Africa Downgrade Looms

  • S&P, Moody’s may cut local currency rating to junk Friday
  • Downgrade may support stocks that benefit from rand weakness

South Africa's Kganyago Sees Inflation Risk to the Upside

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The blow to Johannesburg-traded stocks from a potential downgrade of South Africa’s credit rating is likely to be hardest in banks and retailers, the sectors most vulnerable to local shocks.

S&P Global Ratings and Moody’s Investors Service are scheduled to give their assessments later Friday. A cut in both companies’ ratings on South Africa’s local currency debt to below investment grade would trigger outflows from rand-denominated bonds and cause higher costs for local banks obliged to hold sovereign debt for regulatory purposes.