THURSDAY, 5.00PM
LOCAL markets closed on Thursday without recovering from the morning’s crash, to record the biggest single-day fall on the Johannesburg Stock Exchange since the crash of October 1987.
The industrial index closed 355 points lower at 8 682, and the all share index shed 326 points to close on 7 094. The financial index, which had reached a record high of 10 668,2 on Wednesday, had plunged 467 points to 10 201. The gold index showed a slight gain of 3 points, to 1 008.
Dealers felt the fall on the JSE was an over-reaction based on sentiment rather than fundamentals, particularly since local markets have few direct links with Hong Kong.
THURSDAY, 4.00PM
WEDNESDAY’s 6,2% fall on the Hong Kong stock exchange triggered a fall on local markets on Thursday morning. Hong Kong’s Hang Seng index has fallen 15% since Monday following the curbing of money market rates.
At 1pm the industrial index was 197,1 points lower at 8 839,9, the all gold index was 11,4 points up at 1 016,2 and the all share index dropped 188,1 points to 7 231,1. The financial index closed at a record high of 10 668,2 on Wednesday, but was last 201,1 points lower at 10 467,1.
Dealers expressed surprise at the local correction, saying conditions on Hong Kong markets should not have any effect locally. Some attributed the falls to futures trades, but President Nelson Mandela’s controversial trip to Libya may be a contributing factor.
Tony Twine, senior economist at Econometrix, said the indications of a fall on the JSE have been there for a while, despite some days when the local market seemed to be rising contrary to international trends. “It’s a complex one to watch,” said Twine, who took his own money out of equities six weeks ago, “but you have to take the long-term view. The [recent] ups and downs and low volumes were saying the JSE was as nervous as other markets.”
“Wall Street opens soon, and if that falls it could take us lower, but there’s only half an hour’s trade until our closing, so I think today we’ve seen the worst of it. Japan was only down a percentage and a half today, but if Wall Street and Chicago fuel a fall in Japan we could see an even bigger fall tomorrow,” said Twine.