South Africa is within reach of a brighter future. It has a chance to end president Jacob Zuma's regime that has seen the country fall from being Africa’s brightest economic prospect, and highest rated country, to a real point of concern, with rising debt, declining revenues and slowing growth. Not to mention weakening institutions and cronyism.
Elections for the leadership of the ruling African National Congress are looming. Cyril Ramaphosa offers a chance for change, but a return to Zuma-style politics could be the outcome of a win by Nkosazana Dlamini-Zuma. A final downgrade to junk by Moody’s is just as close.
South Africa could do with nothing else happening to further spook investors. Steinhoff’s decline will not help. Investors in South African bonds may claim they differentiate between credits but they clearly were not willing to take on risk from local property company Growthpoint this week, which had to shelve a new bond issue once Steinhoff hit the skids.
And the decline in share value of anything with the slightest Steinhoff connection must be worrying for those concerned about contagion.
The past two days could prove to be historic for South Africa's capital markets. Any investor who was using Steinhoff as a safe way to gain exposure to the country, despite its large international footprint, will almost certainly end the year with a bad taste in the mouth.
Steinhoff's tumble is undoubtedly a company-specific story. But it doesn’t take much to change market sentiment and the damage done will make life harder for every issuer from South Africa in 2018.