Non-resident outflows of SA equities, bonds more than double in 2023 to R98.1bn

South Africa is a hard sell to foreign investors, who are selling off South African stocks and bonds at a furious pace. 

“The equities market has suffered the most net outflows as foreign appetite for domestic equities has been weighed down by low growth expectations, rising interest rates, heightened exchange rate risk and idiosyncratic risks such as the FATF greylisting and load shedding,” the SA Reserve Bank said in its latest Financial Stability Review (FSR), which is published twice a year.

“In the year to November 2023, non-residents were net sellers of R98.1-billion of domestic equities and bonds; much higher than the net sales of R43.4-billion over the same period in 2022,” the FSR said. 

This helps to explain the rand’s fall of around 9% this year against the dollar and signals that foreign investors are increasingly averse to risk when it comes to the allocation of their capital. 



The JSE All Share Index this year is little changed in the year to date, so it’s not like the bottom has fallen out of it, even as foreign investors ditch local equities. Nor is it shooting the lights out. 

So, one question that the FSR explored was what impact has the “greylisting” had on stock market returns? It provides a summary in the FSR of the findings of a paper that looked into the issue. 

South Africa was placed on the Financial Action Task Force’s (FATF’s) greylist in February this year because it failed to address shortcomings in its anti-money laundering and combating the financing of terrorism systems.

Read more in Daily Maverick: It’s official — South Africa fails to avoid greylisting 



The study looked at other countries such as Nigeria and Barbados that have also been greylisted. And it turns out that other events such as ratings downgrades play a far bigger role. 

“The results show that events such as the downgrading of South Africa to sub-investment grade had a greater impact on stock market returns,” the FSR said.  

“In the longer term, failure to resolve the deficiencies raised by [the] FATF may result in South Africa staying on the greylist for longer, which could have adverse implications for the country’s risk premium, market depth and liquidity, mainly due to capital outflows from non-resident investors.”

So, a greylisting does not pack the same punch on equities as a sovereign downgrade, but it scares the bejesus out of foreign investors – and that, in the long run, drains liquidity. 

South Africa’s many other challenges – power shortages, Transnet’s woes, rampant crime, surging debt levels – are also clearly draining liquidity. 

The wave of foreign net-selling of South African assets will become a tsunami if they are not addressed. DM