How South Africa’s billionaires were hit by the latest rand crash

A currency crash among emerging markets this week, led by the Turkish lira, caused several super wealthy individuals to lose their billionaire status.

According to Forbes, Turkey saw the worst of it as its currency lost 21% of its value to the US dollar. This knocked 13 of the 35 Turkish billionaires out of the 10-figure ranks, the group said.

Since Forbes published its 2018 billionaires list in early March, the 35 Turkish tycoons have lost at least $23 billion of their collective net worth, primarily because of the collapsing lira.

In 2018 through August 13, the lira lost 45% of its value against the dollar.

The Turkish economy has been steadily weakening throughout the year, but was pushed over the edge on Monday when US president Donald Trump imposed sanctions on the country and doubled tariffs on steel and aluminium imports.

The sanctions were reportedly over the house arrest of an American pastor, Andrew Brunson, on disputed terrorism charges in Turkey.

The rand meanwhile lost as much as 10% of its value at one point on Monday, as the chaos in Turkey fed fears of a wider emerging market crisis. The local unit has since recovered slightly, but remains vulnerable. Year-to-date, the rand is 13% weaker against the dollar.

As a result, South Africa’s billionaires have suffered a significant blow to their wealth, according to the real time tracking by Forbes, showing that they collectively lost close to R1 billion, day-on-day, by the end of trade on Tuesday.

At the peak of the rand’s crash – at R15.80 to the dollar – at least one South African billionaire (Stephen Saad, with a net worth at $1 billion) would have likely lost his dollar billionaire status; however this was reversed in the subsequent recovery.

Billionaire wealth, measured in US dollars, is heavily reliant on the USD/ZAR exchange rate, and South African billionaires in particular have enjoyed a steady climb at the start of 2018 off the back of so-called “Ramaphoria” – the positive sentiment surrounding South Africa’s change in leadership at the start of the year.

However, economists say the latest rand crash has proven that the good times are now over, with the rand back at levels comparable to other high-risk countries when measured on a purchasing power parity basis.

Over the past few months the rand has come under strain due to both global and local issues – most notably the ongoing global trade war and a strengthening dollar, as well as slow economic growth and concerns over South Africa’s land laws.

Comparing current billionaire wealth to the Forbes ranking in March (at the height of Ramaphoria), South Africa’s five wealthiest men have lost over $1.5 billion (R21.4 billion) in combined net worth.

The Bloomberg Billionaire Index, which only ranks three South African billionaires (Nathan Kirsh, Nicky Oppenheimer and Johann Rupert) shows that these super wealthy individuals have lost R1.8 billion in the last trading session, and R12.7 billion year to date.

# Billionaire March 2018 (US$bn) August 2018 (US$bn) Change (%)
202 Nicky Oppenheimer 7.7 7.6 -1.3%
228 Johann Rupert 7.0 6.6 -5.7%
924 Koos Bekker 2.6 2.4 -7.7%
1020 Patrice Motsepe 2.4 1.8 -25.0%
1867 Stephen Saad 1.2 1.0 -16.7%

Read: The rand is in recovery mode – here’s where it could end up

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How South Africa’s billionaires were hit by the latest rand crash