MONEYWEB, BY ALEC HOGG, 12 SEPTEMBER 2001
Early morning activity on the South African equity futures market suggests the JSE could lose as much as 8% of its value at the opening in the aftermath of concerns following yesterday’s terrorist attack in New York.
Early action in futures suggests the JSE’s key Alsi-40 Index, which tracks the performance of the 40 most valuable stocks listed on the market, should start the day at least 550 points (7%) down on last night’s close of 7 948 ? with the more pessimistic projections suggesting a decline to below 7 200 (almost 10%).
The September Future on the JSE’s Alsi-40 Index kicked off at 7 500 , but lost 100 points in the first few minutes in thin trading, down only slightly from last night’s close of 7 480. As the Futures Exchange closes half an hour later than the JSE, there was enough time for it to absorb the initial financial panic from the terrorist attack with the All Share futures ending 8,3% down on the day with Industrial Futures 10,5% off.
The 4pm close on the JSE ensured that yesterday at least, losses on the spot market were modest with JSE All Share down 198 points (2,3%) to 8 459; the Industrial Index lost almost 4% and Financials off 4,6%. Futures trader Arthur Buchner of BOE Securities estimates that the decline is likely to be around 8% but he expects shares to bounce back strongly in later trade.
Mercury’s Gavin Betty, however, is concerned that there could be further weakness today if the JSE spot market is hit by panic selling: “If you get an 8% to 10% drop in the spot market, we might see that spilling over to futures with the downward spiral feeding on itself. But at least for now, the market has held up very well,” he said ahead of the JSE’s opening.