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Cape Town - The JSE is now officially experiencing a correction – and fund managers agree that the volatility experienced over the past week will persist for some time.
On Friday the JSE's All Share Index closed on 26 258 points – 11% below the 29 565 in mid-April. The index lost 4% in the past week.
But observers are uncertain of the direction the market will be taking.
Technical analysts are much more negative, while long-term investors believe that value will return to the market from current levels.
Investec Asset Management CEO Hendrik du Toit said there is a huge amount of money currently being managed with fingers on the triggers.
Because the 2008 financial crisis is still fresh in people's minds, an "excessive" amount of money is going into the sidelines (such as into cash) when any hike in volatility is perceived. Investors who have made a lot of money in the past year would rather take profits now than suffer a loss.
Alphonso Raats, head of share trading and derivative instruments at Stanlib, says that many players other than the traditional long-term investors are currently actively participating in the market.
Hedge funds and even foreigners just want to reduce risk.
They are not considering the underlying value of the market. Technical analysts, in particular, are pessimistic.
Frans de Klerk, an independent technical analyst, said it is important to note that the all-share closed significantly below the 26 900 moving average.
If the market fails to consolidate above this level soon, the market could remain under pressure for six months or more.
Nedbank Capital technical strategist Neels Heyneke is also concerned about the markets.
According to Du Toit the eurozone instability plays a big role. There are no clear solutions, political leadership is uncertain and no-one knows which way things are going. According to him, Investec Asset Management sees conditions as representing a buying opportunity and value exists because index investors, in particular, have been selling shares wholesale.
He reckoned the market is caught in a bear phase and that the run it experienced dried up in April. From this point on, he says, the market will fall less than everyone thinks.
- Sake24.com
On Friday the JSE's All Share Index closed on 26 258 points – 11% below the 29 565 in mid-April. The index lost 4% in the past week.
But observers are uncertain of the direction the market will be taking.
Technical analysts are much more negative, while long-term investors believe that value will return to the market from current levels.
Investec Asset Management CEO Hendrik du Toit said there is a huge amount of money currently being managed with fingers on the triggers.
Because the 2008 financial crisis is still fresh in people's minds, an "excessive" amount of money is going into the sidelines (such as into cash) when any hike in volatility is perceived. Investors who have made a lot of money in the past year would rather take profits now than suffer a loss.
Alphonso Raats, head of share trading and derivative instruments at Stanlib, says that many players other than the traditional long-term investors are currently actively participating in the market.
Hedge funds and even foreigners just want to reduce risk.
They are not considering the underlying value of the market. Technical analysts, in particular, are pessimistic.
Frans de Klerk, an independent technical analyst, said it is important to note that the all-share closed significantly below the 26 900 moving average.
If the market fails to consolidate above this level soon, the market could remain under pressure for six months or more.
Nedbank Capital technical strategist Neels Heyneke is also concerned about the markets.
According to Du Toit the eurozone instability plays a big role. There are no clear solutions, political leadership is uncertain and no-one knows which way things are going. According to him, Investec Asset Management sees conditions as representing a buying opportunity and value exists because index investors, in particular, have been selling shares wholesale.
He reckoned the market is caught in a bear phase and that the run it experienced dried up in April. From this point on, he says, the market will fall less than everyone thinks.
- Sake24.com
