SOUTH Africa has lost a staggering R6.8-billion in foreign capital outflows as spooked investors, unsettled by how the country handles Anglo American Platinum's plan to cut 14000 jobs, take cover.
By the end of last week foreign investors had pulled R3.7-billion in the equity portfolio and R2.4-billion in the bonds portfolio out of the country as the ruling ANC threatened to confiscate mine licences.
The capital outflows were a blow to South Africa, especially considering that two weeks ago foreign investors had shown what could be seen as a vote of confidence in the country by investing R2.7-billion in the bonds portfolio.
The equity portfolio, however, had experienced a R328-million capital outflow.
Nedbank Capital analyst Mohammed Nalla said yesterday that the foreign capital outflow has weakened the rand, which last week fell to R8.92, the lowest it has been since April 2009. The currency stood at R8.99 early yesterday.
There are already projections that fuel prices could go up by about 25 cents next month. This means the price of imported goods will rise and spending power diminish.
"If consumers have less and less to spend, companies are going to shut down and people are going to lose jobs," Nalla said.
He said the capital outflows could be caused by fears that companies that wanted to retrench workers would have their mining licences revoked.
"There is an argument that mining licences should be taken away because companies received the licences on false representations by promising to create a certain number of jobs," Nalla said.
"But now the industry is weak and is not creating those jobs. Mining houses are facing difficult challenges as they are not making money.
"This causes a significant amount of unease and tension among foreign investors."
Nalla said capital portfolio flows were very volatile and it was worrying that the level of outflows could gather steam.
He said the government and stakeholders in the industry should sit down and come up with a turnaround plan or else many companies would go out of business.
Chamber of Mines spokesman Vusi Mabena was worried about the ANC's warning.
"The ANC is a concern to the mining industry that is so dependent on investors.
"Any warning that threatens the sustainability of the mining sector and business in general will contribute to the decline in investor confidence in the sector," he said.
R6.8bn flows out as jittery investors flee
SOUTH Africa has lost a staggering R6.8-billion in foreign capital outflows as spooked investors, unsettled by how the country handles Anglo American Platinum's plan to cut 14000 jobs, take cover.
By the end of last week foreign investors had pulled R3.7-billion in the equity portfolio and R2.4-billion in the bonds portfolio out of the country as the ruling ANC threatened to confiscate mine licences.
The capital outflows were a blow to South Africa, especially considering that two weeks ago foreign investors had shown what could be seen as a vote of confidence in the country by investing R2.7-billion in the bonds portfolio.
The equity portfolio, however, had experienced a R328-million capital outflow.
Nedbank Capital analyst Mohammed Nalla said yesterday that the foreign capital outflow has weakened the rand, which last week fell to R8.92, the lowest it has been since April 2009. The currency stood at R8.99 early yesterday.
There are already projections that fuel prices could go up by about 25 cents next month. This means the price of imported goods will rise and spending power diminish.
"If consumers have less and less to spend, companies are going to shut down and people are going to lose jobs," Nalla said.
He said the capital outflows could be caused by fears that companies that wanted to retrench workers would have their mining licences revoked.
"There is an argument that mining licences should be taken away because companies received the licences on false representations by promising to create a certain number of jobs," Nalla said.
"But now the industry is weak and is not creating those jobs. Mining houses are facing difficult challenges as they are not making money.
"This causes a significant amount of unease and tension among foreign investors."
Nalla said capital portfolio flows were very volatile and it was worrying that the level of outflows could gather steam.
He said the government and stakeholders in the industry should sit down and come up with a turnaround plan or else many companies would go out of business.
Chamber of Mines spokesman Vusi Mabena was worried about the ANC's warning.
"The ANC is a concern to the mining industry that is so dependent on investors.
"Any warning that threatens the sustainability of the mining sector and business in general will contribute to the decline in investor confidence in the sector," he said.
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