. globalisation has many benefits for emerging - market economies. capital movements facilitate the efficient allocation of saving, channel resources into productive uses and promote the financing of international trade and investment. in this way globalisation creates opportunities to increase international trade, economic growth, employment creation and welfare. unfortunately, like all good things in life, globalisation also has certain disadvantages. in particular, the integration of south africa into the world economy has made the country more vulnerable to external shocks. these can take the form of supply, demand and financial shocks. in such an uncertain environment the pursuit of financial stability has become even more imperative. although stability does not provide unconditional protection against reversals in international capital flows, it does forestall uncertainties on the monetary front and can counter excessive volatility. the reserve bank therefore remains determined to maintain financial stability in south africa. in conclusion, i wish to thank the president and deputy president of the republic of south africa, and the reverend frank chikane, director general of the presidency, for their support for the work of the south african reserve bank. in particular, i wish to express my heartfelt gratitude for their support for the independence of the south african reserve bank. i also want to place on record my appreciation to mr trevor manuel, minister of finance, mr mandisi mphahlwa, deputy minister of finance, ms maria ramos, director general of national treasury, and the staff of the national treasury for their cooperation with the bank over the past year. a word of appreciation is also appropriate to mr alec erwin, minister of trade and industry, dr alistair ruiters, director general, and the staff of the department of trade and industry who have become important collaborators of the reserve bank. informative meetings were held with the parliamentary portfolio committee on finance, which we found very helpful. i thank my colleagues on the board, including the deputy governors, for their commitment and undivided loyalty to the bank. finally, a word of thanks is also due to the staff of the reserve bank for their work during the past year and for their loyal support.

3 % in september 1998 to a daily average of 13. 3 % in mid - february 2000, influenced by the strength of the rand during that period, low inflation, fiscal discipline and a positive assessment by international rating agencies of south africa as an investment destination. subsequently, bond yields reacted hesitantly to perceived changes in financial markets. in march market sentiment deteriorated markedly owing to the weakness in the external value of the rand, rising official interest rates in major financial centres and higher risk premiums on south african assets. the daily average yield on long - term bonds shifted upwards to reach a peak of 15. 2 % on 10 may 2000, before the return to more stable financial conditions reduced it to 13. 7 % on 22 august 2000. the monthly average inflation - adjusted yield on long - term government bonds amounted to 5. 5 % in july 2000, compared with 10 % in september 1998. trading activity in the secondary bond market was boosted by the uncertainty in international markets. a record annual turnover of r8. 8 trillion was recorded on the bond exchange of south africa in 1999, followed by r6. 2 trillion in the first seven months of 2000, which was about one - quarter more than in the corresponding period of the preceding year. in the primary bond market more active borrowing by private - sector companies compensated for a decline in the net borrowing of the public sector. the share market entered a long and difficult recovery phase after the financial crisis in 1998. the daily average index of all classes of share prices fell by no less than 40 % from the end of april 1998 to the end of august 1998, and then rose gradually to a new all - time high on 17 january 2000 of 10 % above its previous peak in april 1998. rising interest rates, the depreciation of the rand and corrections on major international bourses resulted in a decline in the daily average index of share prices of 28 % until 17 april 2000, when it began to recover again. on 22 august 2000 the daily average index of all classes of share prices was nevertheless still 9 % below its peak on 17 january 2000. the strong recovery of share prices throughout 1999 supported trading activity on the johannesburg stock exchange. the value of shares traded in the secondary share market rose to r448 billion in 1999, which was 40 % more than in 1998. volatility in share prices fuelled trading activity further during 2000. the value of shares traded in the first seven months of this year was 25 % higher than in the corresponding period