JSE’s big foreign capital outflow problem

The JSE has experienced increased net outflows of foreign capital in the past five years, hurting local share prices.

Between 2017 and 2021, foreign outflows from the JSE have increased. Net foreign outflows have improved somewhat in 2022, decreasing from R153 billion to R85 billion.

However, it accelerated again this year. For the 2023 YTD, net outflows increased to R103 billion, much higher than the R74 billion over the same period in 2022.

This is a bad sign as it shows foreign investors do not view South African equities as good investments.

The chart below shows the net outflows of foreign capital from the JSE in the past five years.

Trading volumes on the JSE have also seen a significant pullback in 2022, falling from 122 billion in 2021 to only 81 billion in 2022.

The downward trend continued into 2023. For 2023 year-to-date, the JSE recorded trading volumes of 59 billion, significantly lower than the 64 billion during the same period last year.

This suggests the 2023 year-end trade volume would be even less than the 81 billion in 2022.

The total value traded on the JSE grew from 2017 to 2020. However, it has since been flat without any meaningful increase.

For the 2023 YTD, the total value traded on the JSE is R4.2 trillion, significantly less than the 2022 value of R4.7 trillion.