Foreign equity investors sitting on the JSE’s sidelines waiting for economy to improve

Foreign investors have not returned in large numbers to the Johannesburg Stock Exchange (JSE) even though the higher volumes and values of trading that started after the formation of the Government of National Unity (GNU) last year have persisted into 2025.

Speaking at the SA Trade Connect Conference that was held in Cape Town on Thursday, JSE chief executive Leila Fourie said the formation of the GNU had been a pivotal moment for the JSE and year-to-date since then there had been a 40% uptick in the value of shares traded.

This uptick, which had slowed marginally since the start of the year, had also been boosted by consumer confidence improving following the lowering of interest rates and inflation, and improving GDP forecasts.

She said this has also translated into a better market for listings and there were 8 IPOs on the JSE last year, and a “strong pipeline” for this year.

Public Investment Corporation CEO Abel Sithole, speaking about South Africa, said that like everybody else, to gain acceptance among others, “we need to make ourselves look attractive… we need to produce something that others want to buy... and, we are in constant competition to ensure we retain our value to others.”

Sithole said on the political front, this entailed establishing and maintaining good alliances for trade purposes. He said the issue of property rights in South Africa was not just about land, but that “nobody will invest in South Africa if by fiat, all their stuff can disappear.”

He said the certainty of policy frameworks were equally important because “the promises we make today are the promises we need to keep tomorrow.” He said the country needed to get back to the stage where it was considered the “gateway to Africa.”

“As South Africans, we have reached a stage where we believe we are owed favours. Nobody owes us any favours,” said Sithole.“No other country is going to look out for us; we must look after ourselves,” Sithole said.

He said while some doors might close, such as with the US, others would open, presenting new opportunities for growth, such as with the EU.

Mathew Rattray, CEO of RMB Morgan Stanley said, “we haven’t really seen foreign investors come back to South Africa, despite the GNU“.

Delphine Govender, chief investment officer of Perpetua Investment Managers, said that because global investors typically have many markets and investments to choose from, their focus was on growth.

She said the reason why only some retail stocks and banks such as Capitec attract higher foreign investors on the JSE was because their managements have been able to articulate and deliver on a good growth strategy, in spite of the many headwinds in South Africa.

Ashburton Investments head of equity, Charl de Villiers, said political events in the US had constrained foreign investor interest in emerging markets this year.

He said while many local investors had bought into the prospects of the GNU, the growth that was supposed to arise from lower interest rates, for instance, still had not yet materialised fully. He said this was one of the reasons why foreign investors were still waiting on the sidelines when it came to investing on the JSE.

Kabelo Rikhotoso, chief investment officer at the PIC said they hold almost 15% of every share listed on the JSE, and because of its size, it allocates some of its capital to “smaller, more nimble” asset managers to get benchmark-beating returns.

He said global diversification was part of their strategy at present, and 10% to 12% of their equity portfolio was invested offshore, with, for instance, relatively sizable allocations being made recently to investments in China, India, Malaysia, and Indonesia.

He said their investments in the private market were performing better than expected, and because the PIC has an interest in the development of a “thriving equity market in South Africa,” the planned exit strategy for many of these investments would be by IPO.

BUSINESS REPORT