SA Reaches R100bn in Net Equity Outflows Marking a Seven-Year Low

South Africa’s financial sector reached a discouraging milestone as the country’s net equity outflows hit the R100bn mark, as per the latest Johannesburg Stock Exchange (JSE) figures. This unparalleled outflow was sparked by foreign investors offloading another R1bn worth of local shares just within the past week, leaving the local currency, the rand, under immense pressure at a little over R19/$. This downturn occurred despite the electricity supply's initial signs of stability.

Over the last seven years, the statistics of the JSE have shown a consistent pattern of net selling of domestic shares by foreign investors. However, the selling momentum seems to be increasing in recent months, mirroring the weakening of the economy’s growth prospects.

The level of foreign selling didn't stop at shares: over the same past week, foreign investors got rid of a whopping R12bn in local bonds, reducing the year-to-date net purchases to a mere R6bn. This dual-pronged approach from overseas investors – selling both shares and bonds – has serious implications on the sustainability of South Africa's financial market growth and the state of the local currency.