“Unexpected” Stock Market Crash: How South African Investors React

The South African stock market has been growing at a steady rate over the last few years. The country is known for being one of Africa’s most stable economies and is considered a good investment opportunity. However, recently, their economy might be heading into recession due to an unexpected crash in their stock market.

As investors panic around the world and sell off shares, how are South Africans reacting?

The South African economy is one of the most stable in Africa, with a GDP growth rate close to two percent over the last few years and high levels of foreign investment for its mining sector. However, the country has been trying hard to diversify away from its reliance on gold and other natural resources as part of its “Industrial Revolution.”

The country’s stock market has also been doing well, with the Johannesburg Stock Exchange (JSE) becoming one of Africa’s most prominent and a key source of funding for the country’s fast-growing companies.

6 Steps to recover from the unexpected stock market crash:

  1. Know your risk tolerance: If you are not comfortable taking on more risks, it is always a good idea to diversify. If this sounds like the right strategy for you, investing in international markets might help lower some of that volatility and give you access to different types of investments.
  1. Additionally if you’re looking for areas within emerging markets where there might be growth potential but at a lower level of risk than their domestic stock market(s), consider becoming an offshore investor by opening up accounts outside of South Africa or buying shares in foreign funds which track developing country stocks.
  1. Alternatively, one could also look into low-cost index fund products aimed at following global macroeconomic trends as well as government bonds held outside the local economy (and therefore outside of the risk).
  1. It is never a good idea to panic, especially when it comes to investments. This could lead you to take desperate measures that are costly and potentially dangerous for your portfolio. Remember the adage: “buy low sell high.”
  1. If you happen to be in possession of profits from recent trades, then consider holding on to them until there is more certainty about what’s going with the economy or waiting for better prices before selling off shares once again. It might sound like an obvious strategy, but many investors still make this mistake, so don’t be one of those people!
  1. Be patient: It may not be easy, but resisting the urge to panic can make all the difference. If you’re in a position where you need funds, then consider withdrawing them from your retirement account or liquidating holdings that are at risk of losing value without first consulting with an investment advisor.

There’s always some kind of risk when it comes to investing, but the important thing is to be able to take it on in a way that fits your risk tolerance and personal goals. FBS Brokers are there to help you with your stock market needs!