SARAH BULLEN in Johannesburg | Tuesday 5.30pm.
THE Johannesburg Stock Exchange went in to a tailspin on Tuesday, losing 5,12% of its value as R1,7-billion volume changed hands — most flooding out of the market.
“The selling just did not stop,” a dealer said.
By early afternoon the JSE all share index had lost 4,87% — possibly the the worst single day for the market since the meltdown last October — only to give up a further 16 points to reach an overall loss of 340 points to close at 6303.
Dealers maintain that the fall was driven by a weekend fall in Asian markets, followed by falls in virtually every other major global market during the past 24 hours.
Both of the major Asian markets were lower on Tuesday morning — Japan’s Nikkei Dow was 206 points (1,32%) down at 15420, and Hong Kong’s Hang Seng Index down 193 points (2,75%) at 6841.
Deutsche Morgen Grenfell head of trading Chris Wilde said the market is flooded with concerns that the continually declining Japanese yen will spark currency problems with the Hong Kong dollar and Chinese yuan — two currencies that have so far managed to resist the currency crisis.
A dealer said news that Russia’s one-year gilt rose from an 80% yield on Friday to a 120% yield on Monday, added to rumours that Indonesia is about to default on some of its sovereign debt, sent warning signals through the markets.
A possible default of government debt — with strong implications for the United States — is a serious signal for global markets.
At close of trade, the JSE financial index had lost 770 points (6,68%) to close at 10755, while the industrial index dropped 347 points (4,49%) to a 7376 close. Even the all gold index dropped a solid 28 points (4,03%) to 666 despite a 9c fall in the rand. Most heavyweight shares took a hammering, a fall that could spur private investors to pull out of the markets.
Bonds did not escape a severe pounding, with the R150 shooting to a 17,11% yield from Friday’s close of 16,33%, before pulling back to 16,89%. The rand lost ground against the dollar, falling to R6,3652 by 4.30pm, while a pound cost R10,403.