LEILA FOURIE: How do we get back to rational investing?
The return of rationality in the markets depends on real and effective action by business, government and central banks
07 May 2020 - 05:00
Five years ago, my PhD thesis on financial contagion warned of the potential dislocating effect of a contagious event in China. Though I extended the Black Plague metaphor to financial markets, I never expected I would have to navigate SA’s stock exchange through the effects of a coronavirus pandemic.
In March, the JSE had two of its five largest one-day drops in the all share index (Alsi), and the single-largest one-day gain. By the end of March, the Alsi was down 22% and major banks had shed 48% in market capitalisation in the year to date. The volatility reflected uncertainty in the global economy, and our local market bore the brunt of a rush for perceived safe-haven assets...
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