FRIDAY, 6.00PM
THE JSE ended its worst-ever week on Friday in a stronger position, with the all share index up 294 points from Thursday to 6589. The industrial index gained 305 points to close on 8130, while the financial index ended the day 514 points stronger on 9572. The gold index closed on 896 — 15 points up from Thursday’s close.
The local market was more confident for the first time that the worst was over, as markets around the world began to recover. Although share prices are still short of last week’s prices, investors have begun buying into blue chip stocks once again.
Azar Jammine, the respected chief economist of Econometrix said on Friday that the week’s disaster was “not unexpected, given the rise in global share prices to levels of extreme over-valuation in relation to profit and dividend prospects”.
He said he believed that the stock market crash would not greatly affect the economy as a whole, “because the majority of people in South Africa are not shareholders. Those who are, have enough wealth for it not to impact on the way they spend money.”
But he warned that it could mean for larger financial companies that they “land up in a tricky situation because many are dependent on an ongoing bull market to fund their growth. But it is early days to try and predict what will happen with larger companies.”
Asked if the worst is over, he said the stock markets remain extremely unpredictable. “One has to be cautious because prices have not recovered to their previous low points, so the trend for the moment is down.” (An upwards trend is characterised by rising bottoms, a downward trend by falling tops.)