Attacks on Foreigners in South Africa Prompt Stock Market Pain
Attacks on Foreigners in South Africa Prompt Stock Market Pain
(Bloomberg) -- The growing backlash to xenophobic violence meted out on African nationals living in South Africa is being felt on the Johannesburg stock exchange.
MTN Group Ltd., the continent’s largest mobile phone operator, fell as much as 2%, after the company closed its offices in Nigeria following attacks on its premises in three cities. Shoprite Holdings Ltd., Africa’s largest food retailer, dropped after its stores were attacked in Lagos. The benchmark South African index was 0.2% higher as of 2:27 p.m. after climbing as much as 0.7%. The MSCI Emerging Marketz Index rose 1.5%.
“It’s exactly the reason why local retailers and stocks like MTN who have African exposure are losing ground today,” said Henre Herselman, a derivatives trader at Johannesburg-based Anchor Private Clients, which oversees 38 billion rand ($2.6 billion) for clients. “I have seen several announcements from companies stating they have closed shops out of a fear a retaliation.”
The latest spate of South African attacks broke out in Johannesburg on Sunday and saw the destruction of more than 50 shops and business premises mainly owned by Africans from countries in the rest of the continent. Cars and properties were torched and widespread looting took place. The violence against African nationals may be a reaction to extra competition for jobs and services in Africa’s most-industrialized economy.
“From footage I’ve seen it most definitely will hit Shoprite hard because it goes beyond lost sales, but also cost of repairs and restoring the damage,” said Nolwandle Mthombeni, an analyst at Mergence Investment Managers in Cape Town. “I don’t think this is a permanent deterrent from expanding into rest of continent, but it does mean any short term plans may be pushed out till the attacks are well in the rear-view.”
To contact the reporter on this story: Adelaide Changole in Nairobi at achangole2@bloomberg.net
To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, John Viljoen, Alastair Reed
©2019 Bloomberg L.P.