Fri Oct 21 15:19:57 SAST 2016

Locals fail to see JSE's big picture

By unknown | Mar 27, 2007 | COMMENTS [ 0 ]

Isaac Moledi

Isaac Moledi

Though investing in local equities has paid by a huge margin - especially in the last three years - the majority of South African investors lost out because they left this opportunity to foreigners.

Stanlib, the country's largest unit trust marketer, says foreigners accumulate a net R20 billion of our local shares during the first eight weeks of this year.

Also, in the three years to the end of last year, Stanlib says, foreign buyers acquired R155million in JSE Security Exchange stock.

Despite the 18percent market dip in June last year, foreigners experienced continued value in the JSE and then used short-term corrections as buying opportunities, says Paul Hansen, Stanlib's director of retail investing.

This was the time when the JSE was in the grips of a strong equity bull run.

Hansen says his company is concerned that over the last three years and two months, local investors have tossed away R175billion in JSE shares - willingly selling them to foreigners in the middle of one of our great bull markets.

This, he says, was also during one of South Africa's best periods of economic growth.

"A strategy of buy and hold by proudly South African investors would have made much more sense."

Total returns on the JSE All Share Index, including dividends, are up 281percent since April 2003.

Hansen believes South Africans have failed to spot positives because they are too close to day-by-day negatives.

Using regular power failures as an example, Hansen says for a local they are proof of shortcomings by the authorities and poor planning.

For a foreigner, however, the power failures confirmed the economy was growing faster than even the most optimistic national planners expected.

He said the foreigners saw such indicators and drew positive conclusions, while South Africans saw the same indicators but "failed to spot the silver lining".

Hansen says foreign buying tends to be spread across various sectors and is not linked solely to government's infrastructure spending and 2010 World Cup initiatives.

"It's time South Africans took a step back and looked at the big picture," he said.


Login OR Join up TO COMMENT