South African Stocks Fall After Finance

South Africa's FTSE/JSE Africa All Share Index extended declines after Finance Minister Trevor Manuel quit along with nine other Cabinet ministers following President Thabo Mbeki's ouster by the ruling African National Congress.

The index dropped as much as 4.4 percent, its steepest decline since Aug. 1, and was trading 4.2 percent lower at 24,810.71 as of 1:09 p.m. in Johannesburg.

MTN Group Ltd., Africa's largest mobile-phone company, declined 9.4 percent to 107.05 rand, while Standard Bank Group Ltd., the continent's biggest lender, retreated 4 percent to 88.59 rand.

Ten ministers, including Public Enterprises Minister Alec Erwin and three deputy ministers, submitted their resignations, the presidency said in an e-mailed statement today. South African Deputy President Phumzile Mlambo-Ngcuka resigned earlier today.

The leadership of the ANC ordered Mbeki to quit eight days after a High Court judge suggested he pressured prosecutors to pursue corruption charges against Zuma, whom Mbeki fired in 2005.

Global reaction to financial turmoil

News of the collapse of Lehman Brothers last week sent shockwaves through the banking community and shivers across the wider City of London. Hopes had persisted till the last minute that a rescue takeover could be conjured up.

But the reality of the bankruptcy stunned everyone in financial services. In such circumstances jobs go quickly and a lot of skilled workers enter the labour market at the same time.

The administrators at Lehman are hopeful of selling some parts of the business and so salvaging some jobs. But with Merrill Lynch being taken over by Bank of America, and HBOS by Lloyds TSB, thousands more are likely to be looking for work.

London's restaurants, car dealers and estate agents will be the first casualties of the ripples from the banking crisis. The already depressed housing market will take a further knock.

The wider British economy will be hit by the City downturn. Around 15% of British economic output is accounted for by financial services and related professions like law. The chancellor of the exchequer may want to go to war on excessive City bonuses. But there is unlikely to be much excess for a year or two and he will lose tax revenue when he can ill afford it.