TUESDAY, 5.30PM
THE JSE closed the day with all indices sharply down on the previous day’s close, but off the morning’s lows. The all share index closed down 756 points on 6007, the financial index fell steeply by 1195 points to 8590, and the industrial index was 927 points lower on 7433. The fall on the gold index was not as marked — it closed 34 points lower, on 861.
Bonds yields jumped higher on Tuesday on heavy foreign and local selling, plumbing yields last seen in January. Later in the day, bonds recovered slightly.
At 16:25 the benchmark long government bond, the R150, was quoted at a 15,08% yield from 14,43% at Monday’s close and 14,05% at Friday’s close. The longer-dated R153 bond was at a 15,19% yield from 14,53% before.
The rand moved to new lows against the dollar and sterling. At 16:00 the rand was on a mid-rate of R4,8355 to the dollar from Monday’s close of R4,7810. Against the British pound, the rand was last at last at R8,1703 from R7,8979 late on Monday.
TUESDAY, 2.30PM
STOCKS on the JSE started to edge upwards again after the Johannesburg market’s worst ever crash this morning (see below), but remained well below yesterday’s levels.
The all share index stood at 6030 — 733 points down from yesterday’s close. The industrial index was 867 points down at 7493, the financial index 1131 points lower at 8654, and the all gold index 32 points down at 863.
TUESDAY, 10.30AM
THE Johannesburg Stock Exchange experienced its worst crash ever this morning, with the all-share index down 12% – double yesterday’s drop, and far worse than 1987. At 10:30am the All share index was down 813 points at 5950, the financial index had dropped 1273 points at 8512, the industrial index was down 966 AT 7344, and the gold index down 50 points at 845.
“We’re taking a bath,” said Jarrod Cahn of Cahn Shapiro. “There’s no doubt that what we’ve got here is a crash.” Cahn says however, that the fairly low volumes show the drop is mainly due to private clients who are panicking, and institutions are not involved that much. Also, the new technology makes it easier to trade than in 1987.
” We’ve lost all our gains we’ve made this year,” he said. “But at these levels you can’t sell – it’s too cheap.” In New York, the Dow industrials plunged overnight in their biggest point drop ever, falling 554.26 points, or 7.18%, to 7,161.15. The fall twice triggered the circuit breakers at the New York Stock Exchange, which are designed to stabilise sharp market moves.
With Hong Kong investors already panicky, the New York fall savaged the key Hang Seng index at the opening on Tuesday.
TUESDAY, 12.30PM
Professor Philip Mohr from the Unisa department of Economics says the crash on the JSE shouldn’t have an real impact on the economy. However, because South Africa is seen as an emerging market, there could be a run on the rand, he says. If there is a run on the rand, and if people keep selling bonds, interest rates are going to go up, he says.
Mohr says that the global turmoil shouldn’t affect South African capital flows too much, and feels the current fall in the domestic market should be corrected in the next month or two.
Regarding gold, Mohr says the South African gold industry has been expecting a slump in the price and has already adjusted for it. He doesn’t see immediate job losses. The weak gold price should mean a weaker performance for the economy in short run, which in turn makes it easier for Stals to drop interest rates early next year in order to boost the economy.