SA investors’ addiction to equity has come at the price of growing unemployment and income inequality, writes Dominic Brown
SA investors’ addiction to equity has come at the price of growing unemployment and income inequalityGlobally, stock markets are reported to have lost more than $13-trillion dollars over thepast month. SA was not spared. On March 12 and 13 the JSE dropped by 10%, the biggest single fall in the JSEThe all share index has fallen by more than R2.
With this, an increased emphasis on investing in equity with quick and easy returns became the name of the game. This is, in fact, investment in “financial capital”, a form of capital without any links to the real economy and production, which has given us speculative bubbles, which, when they burst, wreak economic havoc.
For the past four decades, investing in financial capital has been very profitable for corporations, more so than in productive or real capital. This incentivised greater and greater levels of investment in financial capital, globally and in SA.grown four-times the size of the world’s GDP The SA stock market is similarly overvalued. A stock market that’s valued at more than 115% to GDP is overvalued according to the Buffett indicator — a measure of the size of a country’s stock market as a percentage of the country’s GDP — named after multi-billionaire Warren Buffett. In December 2019, the JSE was valued at 343%-to-GDP, making it one of the most overvalued stock markets in the world.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
SA mines to close for three weeks in Covid-19 battleMines say stringent measures are in place to protect employees from the coronavirus
Read more »
SA Express business rescue practitioners to throw in the towel - The Mail & GuardianWith Covid-19 halting air travel, labour unions have been told that lack of post-commencement funding and travel bans have forced the airline to the point of no return.
Read more »
Beuran Hendricks on new list of Cricket SA contracted players, Faf also in the mixLions left-arm seamer Beuran Hendricks has been rewarded with a lucrative Cricket South Africa (CSA) national contract following his stellar Test debut for the Proteas in January.
Read more »
‘Up to 1-million at risk of Covid-19 in SA in 40 days’Government needs to take drastic action to avoid the country reaching a tipping point of 100 locally acquired cases, according to a team of researchers at Wits university
Read more »
Maverick Citizen: OP-ED: SA faith communities and Covid-19: Between religious belief and political idiocyPoliticians, religious leaders and prominent figures in civil society must not play with fire in a situation of mass social unease.
Read more »