A real blue Monday yesterday as markets were in disarray and the bad news continued throughout the day. Discovery Invest sent me a great summary this morning, see below, and I have attached Investec and Allan Gray’s perspective. We all knew it was coming but it is not pleasant to watch!
Please email or phone me if you have any concerns or questions.
The Correction Everyone Asked For, But Nobody Wants
Full blown panic erupted in global stock markets yesterday and there are a number of reasons that could have finally attributed to this long awaited correction: poor data out of China, the devaluation of the yuan, further problems in Greece and the uncertainty of the next US Fed Rate hike.
The drop in commodities along with this risk aversion caused the rand to drop to R14.0672 against the dollar at one point yesterday. The JSE all share index ended 2.85% weaker at 47,631.19 points.
Oil plunged towards $40 a barrel, European stocks closed down 5.4% and the Shanghai composite index slide 8.5% (as I write its trading down another 6% this morning so far!)
Greece received its first 13 billion euros from its new bailout package on Thursday, allowing it to pay its debt of 3.3 billion euros to the European Central Bank and avoid a messy default. Greece is however set for more turbulent times as Prime Minister Alexis Tsipras resigned on Thursday with new elections to be held on 20 September.
Worsening economic data and signs of capital outflows are undermining government attempts to shore up the Chinese stock market. While China said over the weekend they will allow pension funds to buy shares for the first time, a speculated cut in bank reserve ratios failed to materialize.
Today is “Turnaround Tuesday”, so we should see a bounce today in most markets, however the market activity for the rest of the week will be more interesting to watch.
Charting the Market Meltdown:
Please click here for Allan Gray’s GrayIssue
Regards Sigrid
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