BILLIONAIRE hedge fund manager George Soros has added his voice to the growing chorus of naysayers predicting a continuation of the bear market.

Global markets retreated for a second day yesterday after Soros said last month’s rally on markets was not the start of a bull market because the US economy was still shrinking.

“It’s a bear market rally because we have not yet turned the economy around,” Soros said . “This isn’t a financial crisis like all the other financial crises that we have experienced in our lifetime.”

The economy continued to contract, and there was a risk the US would fall into a depression, Soros said.

Billionaire US investor Warren Buffett spooked investors last month when he said the US economy had “fallen off a cliff”, and that the economic turmoil had followed the worst-case scenario he envisaged. Buffett warned against expecting a rapid turnaround.

Europe’s economy showed a larger than expected 1,6% contraction in the fourth quarter last year. Investors bet US aluminium giant Alcoa would kick off the first-quarter earnings season with a loss in posting results last night, and this also weighed on markets.

Share prices of large banks fell sharply on a media report that the International Monetary Fund would raise its estimates for banks’ toxic debt to $4-trillion.

The JSE ended off its lows — 1% down at 20493 — as gold shares rebounded 5,5%. The rand weakened to R9,16/$. London’s FTSE 100 index fell 1,6%. The Dow Jones closed down 2,34% in New York.

Garth Mackenzie, head of derivatives at BoE Private Clients, said: “We ran up hard over the past couple of weeks. Globally, markets just had to take a bit of a breather and that’s what we are seeing.”

Mackenzie said the recent ramp-up in stock prices may have been more than just a bear market rally. Safe-haven assets such as gold and the US dollar had both broken their bear trends, indicating appetite for risk was returning to the market.

“Maybe it was bear market rally, but every bull market starts with a bear market rally. I’m not saying we are rushing into a new bull market ... we may consolidate sideways for quite a few months,” he said.

Although first-quarter earnings in the US were expected to be poor, Mackenzie said investors would be more interested in the prospects statements accompanying the results to find out when companies expected to recover. With Bloomberg