Wikus Furstenberg: Global equity market volatility MEETS the SA bond market - Buy

No one is surprised at the current global equity market volatility and some might even argue that a contraction was always on the cards as valuations had become stretched while supporting economic data was looking less than commensurate. Traditionally at times like these, fixed interest assets become a safe haven for investors fleeing falling share prices. This was however not the case when many markets across the globe experience record equity declines on Monday, 24 August. Heavy trading, particularly on US bourses saw what has come to be called a ‘flash crash’ – stock exchanges try to ease panic selling by inserting circuit breakers at various index levels which when triggered halt trading for 15 minutes. The theory is that this will stop the panic. But of more interest is the effect that this had on our own local bond markets resulting in good buying opportunities for the astute fixed income manager. Wikus Furstenberg explains.