Investors most bullish on South Africa since 2010 as flows surge

If anyone had doubts about the strength of the rebound in South African stocks, the latest data on exchange-traded funds should put them to rest. 

Investors have cut their short positions in the largest ETF focused on the country to the lowest level since 2010, data from Markit Ltd show. That accompanied a surge in net capital inflows into 41 ETFs buying stocks in South Africa to a five-year high of $136-million in the first quarter, the data shows. 

The FTSE/JSE Africa All Share Index in Johannesburg has rallied 12 percent from a two-year low reached in January and the country has regained its position as the largest stock market in Africa and the Middle East. The gains were driven by a rally in commodity prices and the Federal Reserve’s reiteration of a dovish monetary policy. Investors are defying a second cut this year in the International Monetary Fund’s projection for South African economic growth, rising borrowing costs, a slowdown in its biggest market China and political turmoil surrounding President Jacob Zuma.

“Investors are certainly coming back to South Africa,” said Simon Colvin, a London-based research analyst at Markit. “The story there is one of commodity rebound and the bottom you have seen in the rand.”

The short interest as a proportion of outstanding shares in the $447-million iShares MSCI South Africa ETF traded at 2.4 percent this week after falling as low as 0.9 percent on Friday. The fund has attracted net flows of $118-million this year, Colvin said.

The bullish sentiment is a turnaround from central bank figures that showed South Africans moved cash overseas for a 16th consecutive quarter in the final three months of 2015, the longest streak of quarterly outflows since the five years through September 1999. Direct investments by South Africans abroad more than doubled in the fourth quarter to R37.4-billion ($2.5 billion), the central bank figures, released March 8, show.

Keep the powerful accountable

Subscribe for R30/mth for the first three months. Cancel anytime.

Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.

Related stories


Already a subscriber? Sign in here


Latest stories

Kenya’s top court reviews disputed bid to change constitution

The Supreme Court ruling on the proposed constitutional changes, expected after three days of hearings this week, may have major consequences for the August 9 presidential and parliamentary polls.

Democracy delayed in Mali spurs sanctions from neighbours

Mali’s junta now finds itself ostracised by its regional peers – and at the centre of a dangerous new geopolitical game.

‘Armed bandit’ or ‘bandit terrorist’? In Nigeria, the game of...

Over the past two months a controversy has developed over the government’s desire to relabel armed outlaws as ‘bandit terrorists’.

Bring Patrice Lumumba home

The return of Patrice Lumumba’s remains must not be an occasion for Belgium to congratulate itself, but for a full accounting of the colonial violence that led to the assassination and coverup

press releases

Loading latest Press Releases…