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Worried South Africans’ Panic Shopping Spurs Retail Stock Gains

Worried South Africans’ Panic Shopping Spurs Retail Stock Gains

(Bloomberg) -- A rush by worried South African shoppers to stock up on food and vital supplies spurred sharp gains in Johannesburg retail stocks Tuesday, in the wake of President Cyril Ramaphosa declaring a national disaster because of the coronavirus outbreak.

Shoprite Holdings Ltd., Africa’s largest grocer, jumped 13% to be among the best-performing stocks. Woolworths Holdings Ltd., a seller of high-end specialty foods, gained 7.1%. Pick n Pay Stores Ltd. rose 11%.

“Some people in the market have been seeing the pictures of product lines flying off the shelves, hearing about the inventory shortages that stores are having due to the panic buying and are perhaps seeing it as an opportunity,” Lulama Qongqo, an analyst at Mergence Investment Managers, said by email.

Johannesburg-traded retailers may also be benefiting from a view among investors that they are well-managed, well-capitalized businesses that offer an attractive option in the current emerging-market equity turmoil, Qongqo said.

“The market is looking for safer bets as well, and in South Africa, our oligopolistic retail industry with their higher margins relative to other regions and relatively more resilient-looking balance sheets” may be drawing buyers, she said.

An index of South African general retailers advanced as much as 8.2%, with Spar Group Ltd. soaring 10%. Johannesburg’s benchmark stocks gauge was 0.1% higher as of 3:24 p.m., compared with the 1.4% retreat by developing nation peers.

©2020 Bloomberg L.P.