May you live in interesting times, as the Chinese curse goes, and many equity fund market managers whose nerves have frayed over the past few months would understand the true threat implied by that seemingly innocuous imprecation.
As economist and investment analyst David Shapiro said, the best advice he could give investors at the moment would be to "go carefully".
On the first day of trading this year, the JSE all share index opened above the 40 000 mark, reaching an all-time record of 42 207.85 in May, with the market going up and down since.
On July 8, the JSE closed in positive territory, up more than 1.5% at 39 795 points after closing on July 5, down more than 2% on the previous day, at 39 169 points.
Much of the volatility being seen in South African markets has been attributed to two opposing trading camps emerging largely around quantitative easing in the United States and China's slowdown in growth, according to trader Garth Mackenzie.
"There is a lot of nervousness in the market, which is causing volatility to some extent caused by a massive tussle between two groups," he said. "This is particularly around the US decision to slow down on quantitative easing and what impact that will have on the South African market."
Quantitative easing
Mackenzie said some analysts and economists believed that quantitative easing had been supporting the South African market and had been driving up asset class demand, and that easing the policy would see "the market collapse in a heap".
"The other view, which I subscribe to, is that the tapering-off policy will continue at a slow rate until the US is back on its feet," he said.
Mackenzie's take is echoed in interviews with other market experts. It appears that the move away from emerging bond markets is having an effect not only on the South African market but also on the rand.
But Mackenzie and Chris Gilmour, an investment analyst at Absa, say the rand is not the only currency that is feeling this shift from emerging economies — as the graph shows, most emerging market currencies are experiencing similar weaknesses.
Gilmour said he did not see the rand getting any weaker but the currency, like emerging markets and even the Australian dollar, was being affected by outflows of money due to the belief, especially by US investors, that increased interest rates in the US would see better returns on money invested there.
The announcement in May by US Federal Reserve chairperson Ben Bernanke about an early end to the US quantitative easing programme left already jittery investors confused and concerned about the Fed's monetary direction.
US bond yield
"US bond yield seems to be picking up so the early indications are that US interest rates will pick up and, if that is the case, investors and pension funds will take money out of emerging markets and move it back to the United States where they are likely to see better returns," he said.
As it is, bond markets worldwide were immediately hit by US bond yields soaring after Bernanke's statement. The quantitative easing programme, started in 2008, has driven US bond yields to artificially low rates, offering no returns and compelling investors to go abroad.
Gilmour said that quantitative easing would be implemented at a very slow pace, probably ending by 2015, and it could benefit South Africa in the long term.
"Data around the US recovery has been patchy and suggests that it might not be happening as quickly as it appears. There is much excitement around the performance of the S&P 500, but it has not really been growing for the last 10 years — it has actually been moving sideways."
He said recent US jobs data, which was well received by markets, included temporary employment, which might have skewed figures.
"On the balance, I do believe that the US economy is improving gradually and, if the S&P starts moving up, then it's likely that the South African market will start moving up," Gilmour said.
Investors need to be more selective
"Keep in mind that a large chunk of the JSE is owned by foreign investors. One or two of the top 10 companies listed on the JSE are seeing earnings of as much as 50% to 60% come from offshore."
Gilmour and Shapiro said investors can no longer buy across the all share index and expect that to be sufficient for them to get good returns.
"They need to start being a lot more selective about what they choose," said Shapiro. Good management and long-term evidence of growth was a guiding factor.
"Some people are critical, saying the all share is only up by 2% but, when you look at individual companies, the situation becomes slightly different. Some companies like Famous Brands and Richemont are up 30%, while others like Goldfields and AngloGold may be down 30%."
He said there was a lot of value to be found on the JSE in brands such as SABMiller, Discovery, Vodacom and Naspers. Some analysts say bargains can be found in undervalued products.
Others are warning investors not to panic but to take a long-term view, which they believe will see stablisation return to the market, led by the US. The slowdown in China is also affecting the South African market and has taken the sheen out of commodities.
"The slowdown in China is making South Africa itself look like it's slowing down because of a cutback in demand for commodities," said Shapiro.
China is moving from an export-driven economy to a more consumer-driven economy. Gilmour said their analysis had revised China's growth down to as low as 7.4%.
"China is still growing nicely and, quite frankly, we would think it was Christmas if we had that kind of growth here. But we need to look at data coming out that suggests that manufacture is reducing there and wages are increasing."
He said data showed that in a few years China would not have a sufficient workforce, and that manufacturing in some sectors was already moving back to the US, where staff had agreed to salary cuts, making their labour a lot cheaper.
One-child policy warning
An International Monetary Fund report has found that China's one-child policy could mean that it will not have a sufficient workforce to drive the growth it needs.
"Within a few years, the working population will reach a historical peak and then begin a precipitous decline," the document said.
"This raises the point about whether China is poised to cross the Lewis turning point — the point at which it would move from a vast supply of low-cost workers to a labour shortage economy."
The research said that within a few years, probably between 2020 and 2025, the working-age population will reach a historical peak and then will begin a steep decline.
The core working-age population, 20 to 39 years, has already begun to shrink.
"The vast supply of low-cost workers, a core engine of China's growth, will dissipate, with potentially far-reaching implications domestically and externally," it said.
Higher fertility rates, greater labour participation rates or high productivity could delay this turning point, although researchers still felt that demographics would be the dominant factor.