According to the firm, although total assets under management increased by 5% year-on-year at R602 billion (30 September 2022: R574 billion), the average assets under management was flat at R620 billion (30 September 2022: R621 billion).<\/p>\n\n\n\n
The group noted that this represents average net outflows of 10% across the assets under management<\/strong>.<\/p>\n\n\n\n \u201cThis can largely be attributed to industry-wide outflows from the global emerging markets asset class, as demand declined after a decade of weak performance, and to the contracting South Africa savings pool,\u201d the group said.<\/p>\n\n\n\n The South African Reserve Bank (SARB) noted similar concerns in its Quarterly Bulletin<\/a> in December 2023.<\/p>\n\n\n\n According to the SARB, portfolio investment liability flows recorded a significantly larger outflow of R41.9 billion in the third quarter of 2023, following an outflow of R4.6 billion in the preceding quarter as non-residents sold domestic debt and equity securities.<\/strong><\/p>\n\n\n\n Additionally, non-residents\u2019 net purchases of domestic debt securities of R23.2 billion in the second quarter of 2023 switched to net sales of R23.4 billion in the third quarter, while non-residents\u2019 net sales of domestic equity securities moderated from R27.8 billion to R18.5 billion over the same period.<\/p>\n\n\n\n The SARB said several factors contributed to these fluctuations, with concerns about persistent inflation and the potential for central banks to maintain higher interest rates for longer playing a pivotal role. <\/p>\n\n\n\n Consequently, the share of non-resident holdings in domestic government bonds dropped from an all-time high of 42.8% in March 2018 to 25.4% in October 2023.<\/p>\n\n\n\n This trend of capital flight continued in the JSE-listed shares market, with data from the bourse showing non-residents disinvested R427 billion in the country from January to September 2023.<\/strong><\/p>\n\n\n\n This includes bonds of R312 billion and equities of R116 billion \u2013 equating to monthly outflows of R26 billion per month.<\/p>\n\n\n\n The SARB said the prolonged sell-off was driven by concerns over the escalating Middle East conflict, poor domestic and global economic growth, and the impact of load-shedding in South Africa.<\/p>\n\n\n\n Impact on South Africa <\/strong><\/p>\n\n\n\n Investment inflows and outflows have a significant impact<\/a> on the South African economy.<\/p>\n\n\n\n A research paper<\/a> from the SARB\u2019s Economic Research Department economists revealed the effect of net investment outflows on the South African economy.<\/p>\n\n\n\n In the paper, economists at SARB highlighted a strong connection between investment and economic growth, specifically in the context of South Africa’s reliance on foreign investment to offset the country’s poor savings rate. <\/p>\n\n\n\n According to the Reserve Bank’s Monetary Policy Review, South Africa witnessed substantial outflows from foreign investors during the first half of 2023. <\/p>\n\n\n\n The SARB attributed the significant outflows to local structural economic issues and geopolitical tensions caused by the country’s own actions.<\/p>\n\n\n\n South Africa\u2019s largest asset manager, the Public Investment Corporation (PIC), has also flagged its concern<\/a> about foreigners dumping local assets.<\/p>\n\n\n\n The PIC said geopolitical tensions have made investors risk-averse, leading them to sell emerging market assets, such as South African stocks and bonds.<\/p>\n\n\n\n This has caused capital to flow out of emerging markets and into safer assets, such as US dollar-denominated assets.<\/p>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/01\/Shares1.jpg\")
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