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Doomsdayers wrong, but Black Monday synd... Bond market had discounted cut in Bank r... |
Doomsdayers wrong, but Black Monday syndrome prevailsThe doomsdayers who predicted that the JSE would crash were proved wrong on Friday, but the Black Monday syndrome prevailed during the week ahead of today's 10th anniversary of the Wall Street crash. A dealer said there was nervousness in the market because of the anniversary coupled with the weak gold price and concerns over a US-Japan trade war following the barring of Japan's ships from American ports. Although there was no market crash, the indices closed weaker on Friday. The all-share index lost 78.3 points to 7 257, industrials ditched 95.6 points to 8 789.4 and the all gold index shed 23 points to 1 020, on the back of a weak bullion price. Gold fixed in London at $327.30, losing some of its previous week's gain. Gold Fields of SA and Gencor, who announced the merger of their gold interests to form Goldco, added 80c and 95c respectively to close at R99.80 and R12.25 respectively. Vaal Reefs dumped 700c to R260, Western Deep ditched 580c to R116, and Kloof shed 25c to R24,75. Bellwether share De Beers reversed earlier losses to end 60c better at R144, but associate Anglos fell 240c to R256.80. The financial index underwent a sharp correction as well, plunging 122 points to 10 144.9 after having gained around 2% earlier in the week. Bank shares were hit hard with Stanbic ending 400c lower at R216 and Nedcor down 280c to R106.20. Investec defied the trend and gained 200c to R187.60. Foodcorp ended 20c better at R28 on news that a black empowerment group, Dynamo, was poised to buy 31% of it. Tiger Oats has enjoyed a bit of a renaissance lately, fuelled by speculation that it its sights set on acquiring the milling, baking and food interests of Premier. The share has gained 530c this week and closed on Friday at R75.80. Premier was however 10c lower to close the week at 610c. Expectations of good earnings helped IT group Dimension Data also gain 20c at R20.20 Today marks the 10th anniversary of the 1987 Wall Street crash. An SMK Securities newsletter looks at the issue in greater detail and says that it is "possible, rather likely, even desirable, that world equity markets for now pause and undergo something of a shake-out because of the froth appearing here and there. "Hence we would not be surprised by a pullback of some 10-15% in major world equity markets. But we are not driven to doomsday scenarios by the scary graphs now being circulated which suggest a repeat of 1987," it says. The report goes on to say that "it can't find justification" in 1997 for expecting steep falls of 40% to occur in the some of the world's major indices and of recovery periods of two years and longer which so painfully thrashed world equity markets in those dark days of October 1987 and the subsequent months. Thabo Kobokoane
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