As concerns grow about a global recession, job cuts have also started making headlines recently, in particular impacting the tech sector globally. Here we will discuss what is happening with the South African job cuts and what this means for the stock market.
South Africa Job Cuts
One of the biggest e-commerce companies with hubs in South Africa, Naspers, has recently announced that it will make 30% cuts in its workforce. It has yet to announce precisely how many jobs would be lost, but they would be spread across 15 hubs. Naspers is a South African technology company listed on the JSE. The company has a market capitalization of $41.79 billion as of February 2023.
The global tech sector appears to be the most significantly impacted by job cuts, announcing 91,171 in 2022, and big names like Amazon and Google have also announced staff layoffs.
In South Africa, between the first and second quarter of 2022, the manufacturing sector had the highest loss of jobs, with around 73,000 jobs lost. It was followed by transport and communications, which includes telecommunications and ICT, with 54,000 jobs lost. Although there have been job losses, they are not at the same levels as elsewhere, with employment levels in the technology sector in South Africa returning to pre-2020 levels.
Job Cuts and Investments
Investment analysts have stated that an earnings recession is unavoidable this year due to layoffs, a fall in consumer spending, and rising interest rates. Depending on investors’ long-term goals, this is not all bad news. Portfolio diversification is the preferred option for many, balancing out tech-heavy portfolios. Others opt for alternative trading options like CFDs, which give investors access to the stock exchange and the opportunity to speculate and trade the prices of 750 equities. CFDs are a favorite during a period of a downturn as they have the potential to take advantage of both rising and falling share prices.
CFDs also offer a high degree of liquidity, which means that investors can easily sell their positions if they decide they no longer want to hold them. This is important for investors who wish to quickly move their money between different investments.
With more and more news of significant job cuts globally, fears are that this will lead to an earnings recession. This refers to a period of time when the earnings of businesses decrease. This is especially relevant when discussing the top companies listed on the most widely invested stock indexes, like the S&P 500.
The global stock market has been volatile in the past few weeks as investors weigh job cuts and the inevitable recession. In light of this, many investors choose to invest in a variety of different assets and sectors in order to reduce the risk of losing money. And although the tech sector is feeling the brunt of layoffs, other sectors may be poised for growth, including commodities and construction.
