Discovery's stocks penalized by health insurance

DiscoveryStocks of Discovery, one of South Africa's largest financial groups, fell by 11% on August 12, 2019 before recovering to 5%. This is the biggest deterioration in the group's share price since 2015.

To deal with the difficult situation facing the private health insurance sector, the South African authorities proposed on 15 August 2019 a new bill to clean up the sector. This project will limit the role of private insurers in health care. Within seven years, private insurance companies will be unable to cover the same risks and pathologies as the State-owned National Health Insurance (NHI). Private insurers will then simply market services that complement those offered by the State. In the meantime, they are allowed to continue their usual activities in health insurance.

The decline in Discovery's stocks led to the fall of Rand Mechant Investment Holdings (-4.7%), a 25% shareholder in Discovery. Taken together, the shares of Rand Merchant Investment Holdings fell by 28% in 2019.

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