Jeremy Gardiner, a director at Investec Asset Management, said the market rose too much and too quickly and, just when everyone thought the world had shrugged off its problems, news to the contrary came up.

Karl Leinberger, head of investments at Coronation, said the reason for the current correction is nothing new.

He explained that governments' incentive packages to alleviate the financial crisis had to be withdrawn at some point. China would also have closed the taps at some stage, and there has long been concern about the debt situation in certain countries in Eastern Europe. Also, worries about the enormous government indebtedness of Portugal, Italy, Ireland, Greece and Spain (Piigs) made headlines this week.

The debt crisis made investors give the euro a wide berth, again seeking the safety of the dollar. This response, in turn, negatively impacted prices of certain resources, precious metals and shares.

Leinberger said the only people who should be worried about the current correction are those who are overexposed to resources.

It is resources stocks, especially, that dominate the All-Share index on the JSE, which in turn has been pressure.

Resource shares have for some time been overvalued and the correction in the sector has been necessary for a long time, said Leinberger.

The JSE's resources index is currently 13.4% below its recent high, while Anglo American's share price is 20% down.

In contrast, the financial and industrial index has lost only 2.7%, while the banking index was 12% up in January.

- Sake24.com

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