Gershwin Wanneburg
8 October 2008
South African markets recuperated somewhat this morning after enduring one of their worst days in years yesterday.
But investors' nerves were still a bit frayed after anxiety over the world's economy rattled bourses from Europe to South America. The Top-40 Index futures contract for December had risen by around 680 points at 8.40am, 20 minutes before the Johannesburg Stock Exchange opened, while the rand was about 10c stronger against the dollar at around 8.73/$.
The recovery followed a positive start to markets in Asia, but after the rollercoaster ride of recent weeks, it was far from certain whether this marked the end of the rout.
"I'm past hysterical I'm not so sure we're going to open in the red. I think we may be a few points up, but I think flattish," said Efficient Group economist Dawie Roodt.
"My feeling really is that the worst could be over now. Now it's time to mop up after the gemors (mess), but I think the blow-out is over now."
The Top-40 index plunged 7.65% yesterday to 18.953.40 points, hitting its lowest level in more than two years, as overseas bourses caved on to renewed fears about the crisis facing the global economy. The rand plummeted to a near six-year low of 8.98/$ yesterday and lost as much as 6% against the dollar - one of its heaviest losses in one day.
The approval of a $700 billion bail-out package for crisis-hit US banks on Friday has done little to allay investors' concerns, especially since there are signs that the world's biggest economies are still frail.
Traders were also disappointed that rumours of an interest rate cut in the US and Europe did not materialise. But an emergency rate cut in Australia this morning cheered up players, raising hope that other central banks might follow suit.
"It's going to bounce. Already we're seeing reversals on world markets," said Ferdi Heyneke, portfolio manager at Afrifocus Securities.
"We believe what we've seen here is some capitulation, which means we fell heavily too quick It's still pretty volatile. We'll have to watch as the day progresses. At this point it looks like we'll see some rallies."
The MSCI Asia-Pacific excluding Japan stocks index rose 1.4% this morning, snapping back from yesterday - its lowest since December 2005. Australia's benchmark S&P/ASX 200 index jumped 2.3%, bouncing from a three-year low, while Singapore's Straits Times index rose 2.2%.
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