Market turmoil: South Africans are going to feel poorer

Yesterday, Chinese markets lost 8% of their value & the rand touched its lowest ever point to the dollar.

FILE. Yesterday saw Chinese markets losing eight percent of their value, and the rand touching its lowest ever point to the dollar. Picture: Christa Eybers/EWN

JOHANNESBURG - As the turmoil continues in global markets this morning, economists say the declining value of the rand and the problems in the Chinese economy mean South Africans are going to feel poorer.

But personal finance experts say consumers should not panic.

Monday saw Chinese markets losing eight percent of their value, and the rand touching its lowest ever point to the dollar.

European markets also saw €400 billion in value being wiped out.

Liberty Life economist Tendani Mantshimuli says our economic situation is a grim picture.

"Going forward, there doesn't seem to be a silver lining of where growth is coming from, especially if what's happening in the global market is going to persist for a longer time."


This morning, China is still down, but the rest of the Asian markets seem to be making a slight recovery, clawing back some of the losses seen on Monday.

That mood is likely to carry across the oceans and may reflect on how the JSE performs, with trade opening in two hours' time.

Vestact market analyst Sasha Naryshkine says, "I suspect we'll see a lot more green across our screen for the rest of the day."

He says all things considered, the JSE has outperformed other stock exchanges.

"Don't get spooked. Don't think the world is ending. We've seen this many times before. Keep calm and carry on."

After breaking through the R14 to a dollar mark on Monday, South Africa's currency is now back down to just over R13 to the dollar.

The rand/pound exchange is also looking a little healthier at R20,73 cents to the sterling.

LISTEN: Economist Chris Hart's analyses on Asian markets and the effect on the Rand

Financial advisor Paul Roelofse says South Africans should be careful before changing any of their investment decisions.

"If you've got a 10-year horizon then generally this correction will certainly just be a blip on the screen, but if you have a short term horizon I suppose it's going to really affect your capital."

He says that this correction has been predicted for some tim e.

LISTEN: Rand's beating is good in the long term.

Mantshimuli says everyone will feel the impact of this turmoil.

"If the rand continues on its downward slide and the decline is long time, you're definitely going to feel it in your inflation. As someone who holds shares you're definitely going to feel much poorer."

But Roelofse says it's important to simply not panic about your investments.

"You've just got to step back and say, 'How long am I prepared to stay in this market?' And the longer the term this will be a lot more smoother in terms of a ride for risk."

He says this is a difficult situation but it was expected.