Economist cover may be bad news for JSE
The influential international magazine’s big story of the week is SA’s state capture woes
The JSE may suffer on Friday from the Economist magazine’s cover story on the endemic corruption of President Jacob Zuma’s administration, and the economic maladies that go with it.
The Economist’s cover art features a snake in the colours of SA’s flag with the title "The Corruption of SA".
The influential international publication has made the ANC’s upcoming conference at Nasrec between December 16 and 20 this week’s biggest story, summarising the vote for the party’s and the country’s next president as "the choice that could save SA, or wreck it".
"Under President Jacob Zuma, the state is failing. Contracts are awarded through bribes and connections; ruling-party members murder each other over lucrative government jobs; crooks operate with impunity," the magazine’s editorial said.
"What is unusual about SA is not that corruption thrives, but that it does so in plain sight. Thanks to a history of civic activism, a free press and a robust judiciary, South Africans are aware of the wholesale theft."
The rand was trading at R13.73/$ at 6.30am on Friday morning, more than 2% weaker than the R13.43/$ it reached on Tuesday.
The local currency was at R16.16/€ and R18.53/£.
The dollar strengthened against most currencies ahead of the release of November’s US employment statistics scheduled for 3.30pm South African time. The US unemployment rate is expected to have held steady at 4.1%, although the increase in nonfarm payrolls is expected to have slowed to about 200,000 from October’s 261,000.
The JSE’s all share index managed to gain a fraction on Thursday despite Steinhoff International plunging a further 43% to R10, nearly a sixth of the R55.80 it started the week at.
On Thursday night, ratings agency Moody’s slashed Steinhoff’s credit score by four notches to B1 from Baa3. This takes it from the lowest level of investment grade to the fourth rung of "speculative", commonly called junk.
"Given that allegations of accounting irregularities were raised and rebutted in August and again in November, it calls into question the quality of oversight and governance at Steinhoff," Moody’s said in its note.