Johannesburg – South African stocks slid 1.6% on Friday, with petrochemicals firm Sasol tumbling after oil hit a four-year low, reigniting fears about a slowdown in global growth.
Brent crude touched $71.12 a barrel after the Opec oil cartel decided against cutting output despite a supply glut.
Although a lower oil price usually helps support economic growth, it may undermine efforts to avert deflation in Japan and Europe. It may also be further evidence the global economy is losing steam, said Abri du Plessis of Gryphon Asset Management.
“The low oil price is now hitting the market and people are realising it’s not just a positive story, this is slower growth,” he said. “My view is that more shares and more markets should be hit on this.”
The benchmark Top-40 index dropped 1.6% to 44 206. The broad All-Share index fell 1.3% to 49 911.
Sasol, which sells oil and synthetic fuels, tumbled 8.2% to R461.95, its biggest one-day drop in six years. Around 40 percent of its annual revenue comes from oil.
Other commodities firms followed suit, reflecting concerns the slowdown in demand for oil could be evidence of weakening demand for resources in general.
Diversified miner BHP Billiton Plc dropped 5.7% to 262.10 rand. Billiton was the biggest single drag on the benchmark Top-40, shaving nearly 270 points off the index.
Trade was active, with 207 million shares changing hands, well above last year’s daily average of 176 million.