Thu Oct 27 09:04:11 SAST 2016


By Robert Laing | Jan 06, 2010 | COMMENTS [ 0 ]

THE JSE attracted a record R76billion foreign investment in 2009, bouncing back from 2008 when the global credit crunch saw international investors yank R54billion from the local stock exchange.

Foreigners were also net buyers of SA bonds in 2009, buying R23,959billion worth of local bonds compared to R16billion in 2008.

Though beating the previous record of R72billion foreign inflow into SA stocks set in 2006, South Africa did not do well compared to other emerging markets, according to Stanlib economist Kevin Lings.

"Most emerging markets experienced record equity inflows in 2009. Despite the large inflows into the JSE last year, most emerging market equity funds appear to be neutral around South Africa," he said.

While international fund managers are not particularly bullish about South Africa next to other emerging markets, Lings noted that there has been an increase in "cross-over" investment from funds that normally only invest in developed markets.

They have been attracted by the spectacular returns from emerging market equity markets, up 73percent in dollars measured by the MSCI Emerging Markets index.

The JSE's All Share Index's rise was a modest 29percent over 2009. Foreign investors, however, did better than that thanks to the rand strengthening from R9,30 to R7,40 over the course of last year.

"In dollar terms, the SA All Share Index rose by around 61percent in 2009," Lings said.

Lings said most of the inflows were from the US and UK, some from the rest of Europe and a little from Asia, specifically Japan.

"Traditionally, foreign investors would buy the large cap resource shares like Billiton, Anglo and Implats, and some of the other large cap stocks like MTN, Old Mutual and Standard Bank. But there has been increased diversification into other stocks such as construction and some of the retailers."

Local resource stocks were heavily favoured by foreign investors, spurred by higher precious metals prices, which hit record levels in 2009.

Gold prices posted their biggest annual gain in three decades in 2009 as investors bought heavily into bullion, widely favoured as a hedge against economic uncertainties.

Other precious metals such as platinum and palladium also clocked sharp gains for the year, with foreign interest in SA stocks expected to remain high in 2010.


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