Good news for South African foreign investment
South Africa reported the first net inflows by foreign investors to its debt and equity markets since 2022, encouraged by a coalition government committed to boosting economic growth.
Portfolio inflows totaled 45.6 billion rand ($2.7 billion) in the third quarter, compared with an outflow of 20.1 billion rand in the prior three months, the Pretoria-based South African Reserve Bank said in its Quarterly Bulletin published Friday.
Non-residents’ net purchases of local debt totaled 41.4 billion rand, having bought 13 billion rand the prior quarter.
Their net buying of domestic shares traded on the Johannesburg Stock Exchange totaled 4.1 billion rand compared with net disposals of 33 billion rand in the second quarter. The net purchases were the first since the first three months of 2022.
South African stocks experienced the strongest third quarter in 11 years, and analysts tracked by Bloomberg expect momentum to hold over the next 12 months.
Market sentiment in South Africa has improved since the African National Congress aligned with nine rivals — including the business-friendly Democratic Alliance — after it lost its parliamentary majority in May elections.
The new political arrangement has pledged to prioritize economic growth, invest in infrastructure and implement key structural reforms in the country’s energy, logistics and local government sectors.
These are some of the other highlights from the Quarterly Bulletin:
- Foreign direct investment outflow totaled 3.2 billion rand in the third quarter, compared with inflows of 16.6 billion rand in the prior three months, as the repayment of loans by domestic subsidiaries outweighed non-resident parent entities’ equity investment in the units. It was the first outflow since the third quarter of 2020.
- Household debt as a ratio of disposable income rose to 62.4% in the third quarter from 61.8% in the prior three months.
- South Africa’s total external debt increased significantly from $158.3 billion at the end of March to $163.8 billion at the end of June.
By Ntando Thukwana (Bloomberg)
Loading ...
