JOHANNESBURG (miningweekly.com) – The Chamber of Mines (CoM) is the latest business entity to express concern that President Jacob Zuma’s unexpected decision to cut short an international investor roadshow led by Finance Minister Pravin Gordhan will leave investors unsettled and raise the possibility of a downgrade.

Media reports on Tuesday suggested that Zuma intends firing Gordhan, while there have also been rumours that Gordhan has resigned, which he has since denied, telling the media on Tuesday afternoon that he is still Finance Minister.

“The chamber is concerned about both the timing of the request and the negative impact this has had on the markets. At this critical time, where so much has been invested by business, government and organised labour in promoting greater economic stability and to maintaining South Africa’s crucial sovereign investment grade rating, the recent events have fuelled negative speculation which is damaging to our country’s reputation as an investment destination,” the CoM said in a statement on Tuesday.

Business associations Business Unity South Africa (Busa) and Business Leadership South Africa (BLSA) have also expressed “grave concern” over the resurfacing of ratings downgrade fears following the cancellation of the investor trip to the UK and US.

South Africa last year narrowly missed being downgraded to investment junk status, after global ratings agency Standard & Poor’s (S&P’s) retained South Africa’s sovereign credit rating at its current BBB- level – one notch above junk and the lowest investment grade rating.

The decision by S&P’s echoed that of Fitch, which affirmed South Africa's investment-grade credit rating at one notch above junk, but changed its outlook to negative from stable, and Moody’s, which currently rates South Africa two levels above junk.

At the time, the three ratings agencies warned of possible future downgrades on the back of the country’s slowing growth and continued political infighting.

“Gordhan has been instrumental, together with business and labour, in keeping a potential ratings downgrade at bay by reassuring investors that there is a steady hand on the country’s economic tiller,” said Busa president Jabu Mabuza.

Now, with South Africa’s rand plunging on Monday – and reversing the strongest gains it has made in two years – following the news of a directive from Zuma that Gordhan and his team return from the UK immediately, South Africa is once again at risk.

“The rand immediately weakened against the dollar in the wake of the news, with economists commenting that the move escalates concerns in the investment community that Gordhan’s tenure may again be in jeopardy,” Mabuza pointed out.

Both BLSA and Busa cautioned on the consequences of the ill-advised, “unexpected and unexplained” mid-roadshow cancellation, noting that the damage to investor sentiment and the role of Gordhan in maintaining investor confidence should not be underestimated.

“The finance ministry, alongside business and labour who are accompanying the National Treasury on this roadshow, have worked hard to maintain South Africa’s investment grade credit rating,” BLSA said.