JSE CEO Nicky Newton-King. Picture: ARNOLD PRONTO
JSE CEO Nicky Newton-King. Picture: ARNOLD PRONTO

THE plunge in the value of investments on the JSE in the two days after President Jacob Zuma announced he was replacing finance minister Nhlanhla Nene will have a longer term effect on the stability of the economy, JSE CEO Nicky Newton-King warned in a statement on Sunday.

She said individuals and corporates should be aware of the seriousness of this moment, "and take accountability for how we respond".

Ms Newton-King’s statement coincided with Sunday newspaper advertisements taken by Business Leadership SA, which represents 78 of SA’s biggest companies and multinationals, in which it said SA could ill-afford to score "own goals" while tackling problems like high unemployment, below-target economic growth and the increasing cost of servicing national debt.

"In this context the replacement of an effective and trusted finance minister just 18 months into his term of office has raised doubts about our ability to maintain prudent macro-economic policies," BLSA said.

The JSE handled unprecedented volumes on Thursday and Friday. Average daily value traded in equities was R47.8bn, more than double the average of R19.9bn a day in the year to date. The FTSE/JSE financial 15 index fell 13.36%, the FTSE/JSE banks index dropped 18.54% and the FTSE/JSE all-share index shed 2.94%. The market capitalisation of the whole JSE went down by 1.49% to R11.18 trillion, a loss of R169.6bn.

The benchmark government bond, the R186, which was trading on a yield of 8.66% at the beginning of the week, ended the week at 10.40%.

"Market losses put strain on credit extension and interest rates, and raise borrowing costs for companies and individuals," Ms Newton-King said.

"As cost of capital becomes more expensive, this in turn constrains the growth stimulus which we desperately need. The outlook for much needed job creation opportunities diminishes. And higher lending rates make everyday life more expensive for ordinary South Africans.

"Continued currency depreciation will have a profound impact on fuel prices and on inflation overall, which will hurt companies, small businesses, and individuals."