ALAN FINLAY, Johannesburg | Monday 10.00am.
THE JSE followed Asian markets down and by mid-morning was trading nearly 6% lower following Friday’s carnage on Wall Street.
Economists warned that it could slump as low as 10% on the opening of US markets later in the day.
“The bottom will fall out. There’s not much to hold it,” warned George Glynos from Standard and Poor’s MMS. He added that the losses could signal the start of a world economic crisis.
“The Dow is just as overvalued as the Nasdaq, and US CPI [Consumer Price Index] numbers hurt them badly last week. The fall is likley to continue,” he said.
“Finally people are realising that many IT companies are not going to produce results. Economic conditions are worsening for the companies. The two combined are creating a terribly negative sentiment. “
Asian traders described the situation as “trying to catch a falling knife”.
On the local markets, Industrials are being hit the hardest, trading over 7% down by mid-morning. Financials were over 6% down.
Only gold shares have been boosted as investors take cover in bullion. The index was over 4% up, with gold trading $2 up on international markets, at $284,10 an ounce.
Asian stock markets recorded some of their most severe losses ever on Monday with Tokyo’s Nikkei average closing nearly 7% lower and South Korea down over 11%.