Geshy Singh
As we are all aware, last Friday we awoke to the alarming news that the British had the final vote of 51.9 percent to exit the European Union. Of course this lead to great uncertainty in markets and currency depreciation globally.
The immediate impact that morning was Asian markets dropped to the region of five percent, the Pound declined to its lowest in several years of $1.33.
The ZAR has weakened to R15.38 from R14.60 the previous day and our JSE futures priced in a 4.7 percent decline. Of course since the recent removal of Nene, when the rand nose-dived, another shocking depreciation to the ZAR, especially this soon, is certainly not welcomed but is a reality that we need to accept and address.
Our Finance Minister Pravin Gordhan has issued a public reassurance that: “Our banking and financial institutions are well positioned to withstand financial shocks. This was demonstrated in the period leading up to the Great Recession in 2008/2009, when the system demonstrated its resilience.”
Needless to say we are still experiencing the bearing of the market volatility and emotions of anxiety, especially amongst investors are naturally expected.
Be cautious not to overreact and make hasty decisions based on sentiments. As with most long-term investment strategies, short-term volatility is generally expected.
Historically due to fear of uncertainty many investors have learnt the grave lesson that selling low and buying high amidst panic was a costly mistake.
