It’s been a rough ride for South Africa’s stock market, with foreign investors giving the country the cold shoulder for nearly a decade. In the past eight years, they’ve dumped over R990 billion (about $53 billion) in South African equities, and last year was the biggest exit yet—R155 billion (around $8.3 billion) worth of stocks left the JSE.
Now, emerging markets globally haven’t had much of a party either, with MSCI’s benchmark index barely scraping by with a 3% gain. But South Africa? Well, the Johannesburg index has managed to lose almost 6% in dollar terms. Ouch.
And let’s not forget the rand, which has taken a 42% dive over the same period—while other developing countries’ currencies have actually held their ground against the greenback. Talk about a rough patch.
What’s scaring the investors away? A cocktail of issues, including corruption scandals, Eskom’s energy crisis (don’t we all know that one too well), and a rail operator in chaos. Add high unemployment, a mountain of public debt, and an upcoming nail-biting election to the mix, and it’s no wonder foreign money is making a run for it.
But, don’t worry! Ashish Chugh, a portfolio manager at Loomis, believes things could turn around if the election results in reforms that boost investor confidence. Here’s hoping the winning party has a solid plan to get South Africa back on track—and maybe win a little of that lost confidence along the way.
Source Info: https://businesstech.co.za/news/finance/741259/south-africa-kisses-r990-billion-goodbye