South African investors expecting the worst

Madoda Milazi

Madoda Milazi

Local investors' fear levels have reached a potentially dangerous phase, where investment professionals now expect the equity markets to crash and burn, as a result of the global financial meltdown.

The September Sanlam Investment Management Investor Confidence Index, released on Friday, indicated that although South African investors increasingly believed that the local equity market offered value, they were more concerned about the possibility of a market crash. The survey also showed that investors had no confidence in the market's ability to bounce back any time soon.

Frederick White, head of research at Sanlam Investment Management, said that the concern about a possible market crash was the worst it had been since inception of the survey in June 2007.

"Institutional investors were especially bearish on this account, placing the average probability of a crash at 26percent, a more than one-in-four chance that the markets will crash," he said.