Johannesburg - Barclays Africa’s [JSE:BGA] share price at one stage lost almost 5% on Monday morning as the market waits to hear if its British parent company Barclays will announce a withdrawal from Africa later this week.
READ: Barclays Africa shares plummet as UK bank prepares exit
It was however not the only banking stock to lose ground, as the sharp weekend drop in the value of the rand pushed the share prices of all the major banks lower.
At one stage on Monday morning the Financial index was already more than 1.5% lower, which brought last week’s strong post-budget rally to an abrupt halt. The index later recovered somewhat and was only 0.73% softer by mid-morning.
With the Industrial and Resources indices only marginally higher, the All-share index was at that stage only 0.07% up at 49 465 points and the Top 40 index gained only 0.08% to 43 891 points.
Market conditions in general were also not as favourable as last week. The Chinese market pulled other Asian markets lower and the European markets were a mixed bag after a weekend meeting of G20 policymakers ended with no new coordinated action to spur global growth. Solid US data revived expectations of the Federal Reserve further raising rates before year-end.
The new uncertainty was mainly the result of the sharp drop in rand value. Thie unit gave up all its gains since the end of January as a result of the spat between Finance Minister Pravin Gordhan and the ANC on one side and the Hawks, the South African Revenue Service and President Jacob Zuma on the other.
READ: Rand takes massive hit as Sars wars heat up
There are fears that the confrontation could lead to the resignation or sacking of Gordhan as finance minister. This could lead to a downgrade of South Africa’s credit rating to junk status, which would be disastrous for the financial sector and the banks in particular.
READ: Gloves off between Gordhan and 'disruptors'
By mid-morning the rand was trading at R16.14 to the dollar after reaching a low of R16.16 over the weekend.
The possibility of Barclays withdrawing from its African operations also put a damper on the currency as it would be the first major disinvestment from South Africa in years. According the Financial Times, an announcement is expected on Tuesday as Barclays contemplates concentrating on its core European and US interests.
The rand's steep drop against the pound means that Barclays is not benefiting from the local group’s profits and the value of its investment in Barclays Africa is now worth about £400m or R8bn less than when the stake in the local banking group was bought.
Barclays Africa released a statement over the weekend that a withdrawal by Barclays would not affect its activities as it is independently managed and listed with adequate reserves.
By mid-morning Barclays Africa was 4.255% softer at R138.67, which meant the share price has lost 24% over the past year. The stock traded at a high of R194.50 in April last year.
In earlier trade FirstRand [JSE:FSR] was more than 3% lower when it traded at an intraday low of R43.50, but by mid-morning the share price was only 2.38% down at R43.28. FirstRand was the biggest loser among the other big banks.
At that time Standard Bank [JSE:SBK] was 1.44% softer at R108.51 after trading as low as R106.16, and Nedbank [JSE:NED] gave up 1.51% to R183.19 after reaching R179.02 in earlier trade.
The banks were the big losers in the financial sector as the insurance giant Old Mutual [JSE:OML] lost only 1.07% to R37.27 and Sanlam [JSE:SLM] was 0.09% higher at R53.02.
Investors continued to buy commodity shares, considered undervalued despite more bad news about the Chinese economy which is regarded as the biggest buyer of commodities. By mid-morning the Resources index was 0.89% higher.
China said on Monday it expects to lay off 1.8 million workers in the coal and steel sectors as part of efforts to reduce industrial overcapacity, but no timeframe was given.
China has vowed to deal with excess capacity and eliminate hundreds of so-called zombie enterprises - loss-making firms in struggling sectors being kept alive by local governments trying to avoid job losses.
Glencore [JSE:GLN] was one of the top performers on Monday and gained another 5.70% to trade at R29.50. Before Monday’s trade the share was already 57% higher over the past month.
Anglo American [JSE:AGL], which gained 79.5% over the past few months, was back above R100 per share as the stock gained 2.87% in morning trade to R102.53.
Another high flyer, Kumba Iron Ore [JSE:KIO], continued its strong run and traded another 2.34% up at R72.66. The share price is already 179.5% higher over the past 30 days after it reached a 52-week low of only R25.35 as recently as January 17.
SABMiller [JSE:SAB] was the busiest share in terms of value in the Industrial sector, which was only 0.12% stronger. At that stage SABMiller was 0.85% stronger at R928.76 and Naspers [JSE:NPN] traded 0.37% higher at R1 866.90. Sasol [JSE:SOL] lost 1.73% to R426.72.