South Africa’s largest asset managers have warned that changes to the country’s offshore investment rules will lead to an exodus of capital from the country.
The change means anywhere between R550 billion – R800 billion could leave the country over the next five years, said RMB Morgan Stanley in a recent research note., asset manager Ninety One puts the figure between R400 billion and R600 billion, with the group noting that local companies are set to miss out on funding as capital leaves the country.
Money managers have previously jumped at opportunities to increase their offshore exposure. But with global markets in flux as a result of Russia’s invasion of Ukraine, and South Africa benefiting from a stable rand and a rise in commodity prices, it’s not an easy decision this time around.
“We believe that this increase in allowable offshore exposure means that there are more degrees of freedom and choices available. For us, this means that managers must take more intentional, explicit and active decisions in their offshore allocation.”
That's the price any country has to pay, for being more reliant on foreign investment.