South Africa sees $50 bn foreign investment exodus in record eighth year

Foreign investors have continued their exodus from South African stocks, marking the eighth consecutive year of outflows, with a total of over $50 billion leaving the market.

This is based on a Bloomberg report.

Last year, South African equities worth $8.3 billion were sold, marking a record-long streak of decreasing foreign interest.

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The past decade has proven challenging for emerging markets, reflected in Morgan Stanley Capital International's benchmark index gaining just over 3 per cent.

However, the Johannesburg benchmark index faced a loss of nearly 6 per cent in dollar terms, compounded by a 42 per cent depreciation of the rand against other currencies of developing nations.

Foreign investors' apprehensions about South Africa stem from a series of challenges, including corruption scandals, an energy crisis linked to the debt-ridden Eskom Holdings utility, and turmoil at Transnet SOC, the state-run rail and ports operator.

Bloomberg cited Ashish Chugh, a portfolio manager at Loomis, who pointed to these factors as contributors to foreign investors' wariness.

High levels of unemployment and public debt further complicatethe challenges, especially as the nation approaches what is expected to be its most competitive election since the establishment of democracy in 1994.

However, Chugh also noted the potential for improved investor sentiment if the winning party implements robust reforms and policies to address investor concerns.

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