Besides some modest weakness in our local equity market, South Africa seemed largely unscathed by these events. Unfortunately, this relative stability in our markets was not to last. As we progressed through the third quarter, domestic factors started to have a negative effect on the price formulation in local assets and the market increasingly anticipated further ratings downgrades from the rating agencies.
In this vein, South African asset prices, specifically bonds and foreign exchange, weakened in the latter months of the year as market participants became increasingly convinced that further negative ratings actions were imminent. Unfortunately, they were proven to be correct.