Isaac Moledi

Isaac Moledi

Stock market experts advise investors not to panic over the current turmoil, saying the developments might present great buying opportunities.

The fall of the local stock market by 35 percent in rand terms and by almost 60 percent in US dollar terms in recent times warrants selective buying of equities, says Heaton van der Linde, joint head of Allan Gray Institutional Client Services.

Over the past week or so global equity markets have suffered a sharp correction, with emerging markets bearing the brunt of this, falling 15 percent from its peak with South Africa off 13 percent in US dollar terms.

But market experts say this should not worry investors since the key to saving is consistency and the best defence against volatility is time in the market.

Experts say over a longer time frame equities have been clear out-performers, delivering 45,4 percent a year versus 13,4 percent from bonds and 8,7 percent from cash during the three years to end-April.

Their advice:

lDon't panic. If you have a long-term investment horizon, exposure to equities is important since equities will outperform other asset classes in the long term;

lEnsure that your portfolio is adequately diversified, locally and internationally;

lReassess your investment strategy with your adviser regularly to ensure you have an appropriate asset allocation that reflects your risk appetite and long-term return needs;

lIf you are overexposed to equities, consider adjusting your exposure to a more appropriate level because continued volatility is expected;

lIgnore markets and continue to invest as market dips present an opportunity to buy at lower levels; and

lIf you're a medium-term investor or cannot afford any volatility, consider managed solutions and absolute return funds as an option.