SA stocks set for a 10% correction as losses deepen

South Africa’s stock benchmark has fallen 10% since peak in late February as investors pull away from overheated markets while conflict in the Middle East drags on.

The FTSE/JSE Africa All Share Index slid 1.5% to 115 252.20 on Friday. If it closes below 115 610.13, that would mark a 10% slump from the last peak, meeting the definition of a market correction.

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“The highly liquid South African markets often enable global investors to use local assets as early selling destinations in lieu of other EMs that may be more difficult to get out of,” said Herman van Papendorp, head of asset allocation at Momentum Investments.

“The higher oil price related to the Iran war feeds into worries about higher South African inflation.”

South African stocks had been one of the big winners of last year, jumping 38% in 2025 in a rally helped by a meteoric surge in gold prices and signs of cooler inflation. But with oil prices topping $100 a barrel and the war in the Middle East putting a chill on investor sentiment, investors have quickly unwound those bullish bets.

The losses now mean South African stocks rank among the worst-performing in the world in 2026, with a 15% drop on a US dollar basis since February 27.

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“There is always a risk of flows reversing, and while valuations are perhaps not as attractive as we have seen in, let’s say 18 months ago, valuations are far from excessive,” wrote Lester Davids, an analyst at Unum Capital.

The benchmark is still relatively cheap, with an estimated forward price-earnings ratio of 15.6, compared with 18.6 for MSCI’s emerging-market stock gauge, according to data compiled by Bloomberg.

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