The latest net foreign purchases of South African equities and bonds reveal huge capital outflows from local equity and bond markets.
The data was published by DFM Global, an independent discretionary fund manager focusing on analytical analysis to help them build investment products.
DFM Global’s data on cumulative net foreign purchases and sales of JSE equities and South African bonds revealed an acceleration in South African equities and bond sales.
The capital outflow from foreign investors started in the third week of the year and accelerated in February and March.
Over R170 billion in South African shares and bonds have been sold by international investors since the start of 2023.
Likely reasons for the negative net foreign purchases of South African assets include increased load-shedding, South Africa’s greylisting, and political uncertainty.
JC Louw, the CEO of DFM Global, said the transactions recorded between January and March 2023 show the capital outflow is no longer a “mere trickle”.
He added that the data showed foreigners are saying “enough” – and this was before they could factor in recent news that Eskom is exempt from reporting irregular expenditure.
Louw said in March that there had been a massive net sale of domestic assets, which is very concerning.
“The net sales are a sign that foreign investors are voting with their feet. The power outages, the lack of reforms, the infrastructure problems – all these things put a lot of pressure on the country,” he said.
The trend also means foreign investors that need to make asset allocations are taking their money elsewhere.
They likely select more stable markets with a higher likelihood of some level of positive returns, especially with uncertainty dominating the world economy.
“Apple and Amazon are not affected by load shedding, and if the GDP does not grow, companies in South Africa will not grow either,” said Louw.
Net foreign purchases and sales of JSE equities and South African bonds
The charts below, courtesy of DFM Global, show the cumulative net foreign purchases and sales of JSE equities and South African bonds in R million.