South Africa's markets could bottom out another 1500 points down, Sasfin market commentator David Shapiro predicted on Friday.

"We're very, very close to the bottom. I reckon we've got another few points to go then we'll start to bounce up," he said amid reports that the Johannesburg Securities Exchange had joined the world bloodbath.

"That would be in line with long term valuations," Shapiro pointed out.

"We get very emotional over these things.

"I don't think we'll get there. I think we'll start forming the bottom now," he said.

He nonetheless added: "The bottom is the bottom. The bottom is zero... "

Already people were describing the "giveaway" prices as "crazy", but he said they could benefit if they were prepared to wait a bit and buy good companies with assets.

"You've got to have courage."

Tracking world funds

He said the South African markets were tracking what was happening on world funds on Friday.

That's what the problem was and had been for the past week.

"World markets are falling in a heap. The Dow Jones is down seven percent...

"It has just been an horrific week in global markets in terms of destruction of wealth and falls in prices."

The concern was that more banks would go insolvent and that the world economy was going to go into recession.

"We're seeing people abandoning stocks, getting cash".

No-one knew who was selling. "It's difficult to get to grips with who's triggering this."

In the past week, a number of countries had cut rates on top of other packages designed to alleviate the credit crisis. These were going to take time to take effect. "Selling could continue until it exhausts itself," said Shapiro.

There had been a massive withdrawal of foreign funds from the South African markets as investors took flight to the safe territory of the United States Dollar.

People went into commodities

The JSE was down four percent by mid-afternoon on Friday.

Shapiro said the JSE reached an all time peak in May, driven by high commodity prices.

With the oil price up and the dollar weak, people went into commodities for protection against inflation and the falling dollar.

The All Share index was at 33 233 on 22 May. On Friday, it was 39 percent lower. "That's massive," he said. However, for the year it was down 30 percent and on a year-to-year basis it was "not that bad".

Put into perspective, someone who came into the market five years ago would still be up 17 percent per annum.

Even the depreciation of the rand would come into the economy, stimulating exports and local manufacture by making imports more expensive, said Shapiro, adding that the monetary policy committee had been right to leave rates unchanged.

What was interesting was that the market was still in overbought territory over ten years.

"So we are correcting. So the markets are correcting aggressive gains since 1998... We're seeing the wind down of 10 years of growth. The market is just realigning the trend."

People in the market since about this time in 1998 would be up 16 percent per annum, excluding dividends, which would increase the figure to about 18 percent.

"It seems to be ending years and years or excess and over-optimism."