The SA Daily
08 April 2020
Viral turmoil for financial markets
Shireen Darmalingam
- It’s been 12 days since SA’s 21-day national lockdown commenced. We now have 1,749 confirmed cases of COVID-19, with the official death toll at 13. The government recently announced a massive door-to-door testing and screening initiative which will likely pick up in the coming weeks. Thus far, over 56,000 virus tests have been conducted. This compares quite well with countries such as Brazil that have conducted a similar number of tests, but greatly lags say Australia (over 300,000 tests) and several European countries where, incidentally, new cases of COVID-19 now appear to be stabilising.
- Admittedly, SA is still in the early stages of this pandemic. According to the National Health Laboratory Service (NHLS), SA can conduct around 5,000 tests per day. But with the addition of new mobile laboratories over the coming weeks, testing is expected to increase to as much as 36,000 per day by end April, which should allow for a clearer picture of the outbreak here.
- SA financial markets will remain volatile though as investors flee for safer assets, with damaging fall-out already observed in our markets; the rand is now much weaker since the first case was reported on 5 March (by 13.8%) and the SA credit default swap (CDS) rose from 220 bps on 5 March to 444 bps yesterday. The yield on the SA 10-year bond has also increased to 10.9% from a pre-COVID level of 8.8%. Non-residents have been net sellers of both equities and bonds since then to the tune of R17.2bn and R49.1bn respectively as concerns about growth and SA’s deteriorating fiscus abide, alongside pandemic fears.
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