So, October — at least at the time of writing on the 23rd — went by without any major mishaps.
The month, of course, has ominous significance for investors worldwide: on October 19 1987 global markets plummeted in the most horrific fashion on Black Monday.
I only started my career at Business Day in late 1988, and in my second-last year at Rhodes University I certainly would have had more esoteric matters and Bacchanalian quests top of mind to blot out news of a market correction. If I was touched by events, it was that a friend had just pranged his Cortina Big Six outside the Graham Hotel (don’t ask!). When he made his insurance claim he found out that listed insurer IGI had hit the skids and was in curatorship.
Investment company Hosken Consolidated Investments — later resurrected and overhauled by former trade unionists Johnny Copelyn and Marcel Golding — was IGI’s parent company.
But Black Monday was really scary. With several large international markets dropping more than 20% in just a few hours, fortunes were wiped out, particularly if investors were geared to their share portfolios (as many were in those days). Now you know why “circuit breakers” — which can halt panic trading before it spirals out of control — were introduced into most stock exchanges.
The JSE took a battering in October 1987 too, but the damage was longer lasting in some segments as the bourse had just had a rush of (mainly untested) small-cap listings. Some share prices never recovered, and that segment of the market dribbled along until the dawn of the new South Africa in the mid-1990s.
That said, the hardier new listings — like Spur, Bowler Metcalf, Transpaco and Combined Motor Holdings — rewarded their long-term backers handsomely without ever taking on a semblance of risk. Hopefully there are more such enduring small-cap counters tucked away in the corners of the JSE.
The JSE’s small-cap sector has pepped up markedly recently, with a good number of counters stretching to new highs. The promise of solid earnings growth and generous dividend flows certainly is appetising in an economy that might be stirred to life by the government of national unity.
In this regard, Anthony Clark’s article in this edition is an intriguing read.
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