SA markets battered by global credit worries

JOHANNESBURG – South African markets were battered along with other international stocks on Monday as investors shunned riskier assets on the widening fallout from a global credit crisis.

The rand dived almost four per cent against the dollar as investors dumped high-yielding currencies, before regaining some composure, while stocks chipped away during the day at huge early losses. The local currency was trading at 8,1505 to the greenback at 1548 GMT, 2,6 per cent softer than its close in New York on Friday.It slid to 8,2450 – its weakest level since mid-2003 – in Asian trade, before the Johannesburg session opened.Government bonds sank with the rand but also clawed back some losses as the day wore on.The Top-40 index tripped 2,28 per cent to 27 831,12 points, after falling as much as 4,74 per cent earlier.The broader All-Share index lost 2,35 per cent to 29 928,07 points, recovering from a session low of 29 241,26.Banking stocks were the hardest hit as global credit woes continued to wreak havoc on international markets after news of Wall Street’s Bear Sterns’ near collapse.The company was being sold to JPMorgan for just US$236 million – equivalent to 90 per cent below Friday’s closing share price – in an emergency deal backed by the US Federal Reserve in a sign of a deepening crisis.The Fed also announced a surprise 25 point cut in its discount rate to 3,25 per cent on Sunday.”Obviously it’s been quite wild today on the back of global markets, with the Bear Sterns story impacting markets all over the world,” said Ferdi Heyneke, portfolio manager at Afrifocus Securities.”There was a slight recovery later in the day with some bargain hunting.There was a feeling it was a little overdone give the Bear Sterns thing is quite a specific story, but sentiment is still very shaky.”Financials were the hardest with Investec PLC falling 5,79 per cent to 49 rand after being almost 10 per cent down at one stage, while FirstRand dropped 3,75 per cent to 15,40 rand.The rand felt the strain of massive risk aversion.”The move happened in the Far East …it opened (in Johannesburg) at the worst levels, and has managed to stage a mild recovery, but it are still much weaker (than Friday),” Bidvest Bank chief dealer Ion de Vleeschauwer said.”Riskier assets are not the flavour of the month …it has not been a good day.The guys are not happy to have riskier assets on their books and the end is not in sight yet.”Nampa-ReutersThe local currency was trading at 8,1505 to the greenback at 1548 GMT, 2,6 per cent softer than its close in New York on Friday.It slid to 8,2450 – its weakest level since mid-2003 – in Asian trade, before the Johannesburg session opened.Government bonds sank with the rand but also clawed back some losses as the day wore on.The Top-40 index tripped 2,28 per cent to 27 831,12 points, after falling as much as 4,74 per cent earlier.The broader All-Share index lost 2,35 per cent to 29 928,07 points, recovering from a session low of 29 241,26.Banking stocks were the hardest hit as global credit woes continued to wreak havoc on international markets after news of Wall Street’s Bear Sterns’ near collapse.The company was being sold to JPMorgan for just US$236 million – equivalent to 90 per cent below Friday’s closing share price – in an emergency deal backed by the US Federal Reserve in a sign of a deepening crisis.The Fed also announced a surprise 25 point cut in its discount rate to 3,25 per cent on Sunday.”Obviously it’s been quite wild today on the back of global markets, with the Bear Sterns story impacting markets all over the world,” said Ferdi Heyneke, portfolio manager at Afrifocus Securities.”There was a slight recovery later in the day with some bargain hunting.There was a feeling it was a little overdone give the Bear Sterns thing is quite a specific story, but sentiment is still very shaky.”Financials were the hardest with Investec PLC falling 5,79 per cent to 49 rand after being almost 10 per cent down at one stage, while FirstRand dropped 3,75 per cent to 15,40 rand.The rand felt the strain of massive risk aversion.”The move happened in the Far East …it opened (in Johannesburg) at the worst levels, and has managed to stage a mild recovery, but it are still much weaker (than Friday),” Bidvest Bank chief dealer Ion de Vleeschauwer said.”Riskier assets are not the flavour of the month …it has not been a good day.The guys are not happy to have riskier assets on their books and the end is not in sight yet.”Nampa-Reuters