Retail Stocks’ Longest Drop Since 2014 Shows South Africa Gloom

JOHANNESBURG (Capital Markets in Africa) – The pressures on South African consumers are showing in the country’s retail stocks.

An index of general retailers traded in Johannesburg has fallen for the past seven weeks, the longest losing streak since February 2014. A government report Wednesday showed that retail sales in Africa’s most-industrialized economy in April rose at the slowest pace since February last year.

South African shoppers are contending with rising fuel prices, partly as weakness in the rand pushes up the cost of oil imports. The currency weakened for a fifth day Wednesday, the longest losing streak since the start of April. And more bad news may be on the way in the form of accelerating inflation. Expectations of inflation, as measured by the five-year breakeven rate, are at the highest since the middle of December, all but eliminating prospects that the Reserve Bank will give consumers any relief in the form of further interest-rate cuts.

April retail sales climbed 0.5 percent from a year earlier, compared with a median economist estimate of a 4.4 percent increase, Pretoria-based Statistics South Africa said.

Massmart Holdings Ltd. and Lewis Group Ltd. have led the decline among general retailers during their recent slump, falling 31 percent in Johannesburg since April 23. Cashbuild Ltd. has retreated 24 percent and Truworths International Ltd. 22 percent. Mr Price Group Ltd. has dropped 14 percent.

Source: Bloomberg Business News