The Crash – 10 Years On

The world will never forget the financial crisis of 2008. For South Africa, the biggest takeaway was there are no substitutes for strong institutions.

- Fifi Peters

It has already been 10 years since the collapse of Lehman Brothers in the United States (US), an event that shook the world and triggered the biggest financial crisis since the Great Depression of 1929.

People from New York to London, Hong Kong to Johannesburg, lost billions as stock markets crashed and the global economy plunged into recession.

Watching it all happen was Russell Loubser, the former boss of Africa’s largest stock exchange, the Johannesburg Stock Exchange (JSE), located on Gwen Lane in the plush suburb of Sandton. For him, memories of September 15, 2008, are as clear as day.

“I will never forget it, I was too scared to leave the building,” says Loubser to CNBC Africa. “I was convinced the world financial markets were on the brink of collapse.” He wasn’t alone.

Finding an investor that thought rationally was almost impossible. Panic was the name of the game. This showed in the 40% plunge in share prices across the JSE. The JSE all-share index nosedived from about 32,000 points to just below 18,000 as investors tried to save as much money as possible by exiting the risky bourses. The rand’s fortunes were no different.

And despite repeated calls for calm, there was very little bosses like Loubser could do. “I remember I was contacted by my regulator, the FSB (known today as the Financial Sector Conduct Authority or FSCA) and the South African Reserve Bank (SARB), and asked what we were doing about stabilizing markets.

“Other stock exchanges stopped trading and banned short selling. I said we would not do the same thing because short selling is a vital exercise that allows overvalued share prices to be brought back to market levels under controlled circumstances. And we had that,” he says.