Foreign investors have accelerated their selling of equities on the JSE, with sales 40% greater thus far in 2023 than in the same period in 2022. To last Friday, non-SA investors sold a net R103 billion of equities, versus R73 billion in the first 40 weeks of last year. Year to date, the JSE All Share Index is down 1.1%.
It does not help that investors are pulling their money from emerging markets. A Bloomberg report this week noted that “outflows from US-listed ETFs that invest across developing nations as well as those that target specific countries totalled $3.12 billion last week”. This was the largest weekly outflow this year, where net inflows only total $6.86 billion.
“As a result, foreign investors have sold local equities for 48 of the last 54 months and now are positioned at half the benchmark weight in South Africa within the emerging market index. Local investors are fast approaching the 45% maximum allowed in offshore holdings. The result is a plethora of 7X PE and 7% dividend-yielding stocks, as the herd continues to sell quality SA stocks on 7% yields in order to convert their one rand into 5 US cents, and then buy US tech stocks on 0.
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