JSE sees R90bn in outflows

JSE sees R90bn in outflows
Published: 03 October 2017
Amid robust demand for emerging-market equities, there's one place global investors are avoiding: Africa's biggest stock market.

With almost a full quarter to go, outflows from the Johannesburg Stock Exchange (JSE) have already reached R90.5bn this year, on track to equal last year's record R125.8bn. By comparison, net sales reached R56.6bn in 2008, when emerging-market assets bore the brunt of a selloff sparked by the global financial crisis.

While the JSE's benchmark index is hovering near a record after climbing 11 percent this year, the stocks aren't an attractive prospect for foreigners who have to factor in a weakening rand on top of anemic growth, rich valuations and political risks.

While SA emerged from a recession in the second quarter, the fiscal deficit is set to widen as revenue falls short of projections. The ANC, meanwhile, is also heading for a bruising leadership battle in December amid allegations of corruption and mismanagement.

"GDP growth is still very tepid at about half a percentage point, so vis-a-vis the other emerging markets it's extremely disappointing," said Jaap Meijer, head of equity research at Arqaam Capita in Dubai. "Some of the other emerging markets are picking up and recovering and South Africa is actually not showing any momentum.