Jacob Zuma's shock reshuffle hurts South Africa's economy

Market Report

There has been outrage over President Zuma’s personal wealth (Getty Images)

With the economy crumbling and the mining industry in freefall, the last thing South Africans wanted was more uncertainty. But that’s what they got when President Zuma fired the highly respected finance minister Nhlanhla Nene and replaced him with the relatively unknown David van Rooyen.

The shock move to oust the outspoken Mr Nene, who reportedly vetoed Jacob Zuma’s wish to buy a new presidential jet among other outlandish spending plans, sent shockwaves through the already shaky economy, a fifth of whose GDP stems from mining.

The rand crashed to new lows, hurting Old Mutual and Investec, the financial services groups listed in both London and Johannesburg.

A note from broker RBC heaped more pressure on the FTSE 100 giant Old Mutual by cutting its recommendation to “underperform” and warning that “such significant exposure to the rand will hold back the share price”.

Old Mutual crashed 21.2p or 11 per cent to 174.2p, while Investec, a FTSE 250 member, dropped 58.6p or 11 per cent to 469.9p.

The FTSE 100 made it six consecutive days of declines, down another 38.63 points yesterday at 6,088.05.

The clothing retailers Next, down 230p to 7,500p, Primark owner Associated British Foods, 78p cheaper at 3,436p, and N Brown, 19p off at 325p, were on the losing side as their stocks went “ex-dividend”. That meant investors buying now will not get their hands on the latest payout.

Micro Focus shot to the top of the mid-cap index, up 185p or 14 per cent to an all-time high of 1,516p, on the back of strong results following last year’s $2.5bn (£1.6bn) takeover of Attachmate Group.

Imaginatik, the AIM-listed software minnow in which disgraced former Quindell boss Rob Terry has a 15.6 per cent stake, fell 0.5p or 9 per cent to 5.13p as the company confirmed it will be “considering various funding options” – comments that are likely to prick the ears of Mr Terry, who has publicly stated his desire to take part in another funding round.

Vague takeover chatter energised the fitness tracker firm Fitbug, up 0.55p or 67 per cent to 1.38p.