The Johannesburg Securities Exchange dropped seven percent on Monday, mirroring a global plunge at the start of the week's trading.

"This is madness," said Sanlam Private Investments branch manager Manny Adebowale.

South Africa markets closed 1580 points down on the day. Germany's Dax index was also down seven percent, London's FTSE dropped 7.3 percent and the Dow Jones was below 10 000 points for the first time in six or seven years.

"Conventional wisdom doesn't work here," said Adebowale.

There was a sell-off in emerging markets on fears of a recession in Europe.

"Fear rules the day"

"Fear rules the day," he said.

The trouble was going to affect the current account deficit, which for the past three or four years had been supplied by foreign portfolios.

If foreigners kept on selling, the deficit was going to get bigger — and everyone was trying to get out before everybody else.

"You can throw valuation out of the window. Nobody cares about valuation anymore," said Adebowale. "It is horrible".

Everyone had expected a recovery with the approval of the $700-billion bailout in the United States, however nobody had known the problem in Europe was as big.

Now Europe's big banks had come out and said they were in trouble. It was this was new information which had sent the markets plummeting.

"Worse destruction"

"This is worse destruction.

"Pension funds, unit trusts, everything is going down the drain here," he said explaining that this meant ordinary people's assets were coming down.

This was not a one-day event. It had been going on for three months, since May. The market has never recovered."

On August 4, the rand was valued at 7.24 to the dollar. On Monday, it weakened to 8.94 to the dollar.

"It makes people poorer every day.

"It might be short term. Who knows? It might be long term. We don't know."

Sapa