South African Markets Edge Lower Amid Resource Losses, Sugar Industry Faces Crisis
South African equities closed lower on Thursday, with the FTSE/JSE All Share Index falling 0.55 % to 121,845 points. The session reflected volatility as resource and industrial counters weighed on the market, while gold and property stocks showed resilience. Investor attention is divided between domestic corporate developments, including the looming liquidation of Tongaat Hulett, and ongoing fiscal policy debates over the SRD grant extension.
Market Wrap: Resources Drag, Select Sectors Advance
The All Share Index opened at 122,738 and fluctuated between 120,909 and 123,199. Year-to-date, the index has gained 21.07 %, while over the past year it is up 5.77 %.
Resource shares led losses, with the Resources 10 Index down 0.82 %. Major mining stocks retreated: Kumba fell 4.41%, Anglo lost 2.29%, and Impala declined 2.49%.
Industrial and financial counters also eased, with the All Share Industrials Index slipping 0.57% and the Financial 15 Index down 0.34%. In contrast, the SA Property Index rose 0.48%, reflecting ongoing investor interest in real estate assets.
Among individual gainers, Sasol surged 10.94 % to R142.42 on high trading volumes, while Pan-African Resources and Mondi PLC advanced 3.41 % and 2.67 %, respectively. Telkom fell 3.78 %, and DRD Gold retreated 3.4 %. Gold Fields led trading in both value and volume, with 10,779 trades exchanging more than 1.55 billion rands.
Sector performance was mixed. The Chemicals Index rose 7.59 %, and Industrial Materials climbed 2.88 %.gg f Tobacco, Oil, Gas, and Coal, and Pharmaceuticals and Biotechnology posted smaller gains, reflecting cautious market sentiment.
Several stocks reached new 52-week highs, led by Sasol, Brimstone, and Pan-African Resources, while Afro-C recorded a 52-week low, falling 10 %.
The rand weakened slightly against major currencies, trading at R16.15 against the U.S. dollar, R19.00 against the euro, and R21.74 against the British pound.
Commodities saw mixed movements: gold rose 0.57 % to $5,004 per ounce, platinum declined 0.84 %, palladium fell 2.6 %, and Brent crude advanced 1.81 % to $71.40 per barrel.
Global markets posted modest gains. The Nikkei closed at 57,468, the Nasdaq at 22,754, and the S&P 500 at 6,862.
Cryptocurrencies were subdued, with Bitcoin down 0.46 % at $66,115 and Ethereum falling 1.38 % to $1,917.
Tongaat Hulett Faces Liquidation as Sugar Imports Bite
Tongaat Hulett, a 134-year-old South African sugar company, is set to enter provisional liquidation following the failure of business rescue efforts. The KwaZulu-Natal High Court approved the termination of the company’s rescue plan after practitioners concluded that no viable solution remained.
The company, with roots dating to the late 19th century, entered business rescue in October 2022 after accounting irregularities, financial misstatements, and governance failures under former management destroyed approximately R12 billion in shareholder value and severely impaired its balance sheet.
Declining domestic sales compounded Tongaat’s difficulties, as large volumes of low-cost imported sugar entered South Africa.
The South African Farmers Development Association (SAFDA) warned that imports continue to ravage the industry, with over 150,000 tons of foreign sugar in the market.
SAFDA chairman Siyabonga Madlala highlighted that imported sugar is often subsidised, selling below production costs, while local producers face higher labour and compliance expenses.
The government has introduced new rules to help producers manage “carry-over tonnages,” allowing unsold sugar to be stored at the end of a season while ensuring farmers are paid.
The measures aim to improve cash flow and the recoverable value price for farmers. However, SAFDA emphasized that the regulations do not address the broader issue of cheap imports, which it says is the key threat to industry stability.
The potential collapse of Tongaat Hulett has significant implications for the regional economy.
The cane-growing sector supports roughly 250,000 jobs, and disruptions could have a severe impact on employment and rural livelihoods. The industry has applied for a tariff review with the International Trade Administration Commission to protect local production from imported sugar.
SRD Grant Extension Poses Fiscal Challenges
Meanwhile, South Africa’s social relief of distress grant, initially introduced as a temporary measure during the Covid-19 pandemic, has been extended indefinitely by President Cyril Ramaphosa. The grant will serve as a basis for a permanent basic income support initiative.
The National Treasury faces constraints in funding the extended grant. Finance Minister Enoch Godongwana had previously indicated that any extension would require new revenue or reprioritization of spending.
Analysts note that the Treasury’s options are limited following the failed VAT increase proposal in the 2025 Budget, which was struck down after political opposition and legal challenges.
The SRD grant currently costs around R40 billion annually and is budgeted until March 2027.
Analysts suggest that the Treasury may delay major funding decisions until after municipal elections later this year, given the political sensitivity of tax increases. Studies indicate that a permanent basic income grant could cost between R20 billion and R2 trillion annually, depending on scope, highlighting the fiscal pressures involved.
Competition Enforcement in Automotive Glass
The Competition Commission has referred PG Glass and Glasfit to the Competition Tribunal for allegedly engaging in price-fixing in the automotive glass market. The two companies supply laminated and toughened glass to end-users and insurance firms in South Africa.
The Commission alleges that PG Glass and Glasfit have coordinated price increases since 2004, raising prices by the same %age annually. Commissioner Doris Tshepe emphasized that dismantling the alleged cartel is crucial to ensuring fair pricing for consumers and insurance companies. If found guilty, the companies could face administrative penalties of up to 10 % of turnover.
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