Foreign investors have withdrawn a staggering $3.7 billion from South African equities since October 2024, marking the longest streak of outflows from the continent’s largest equity market in five years, according to a report by the Institute of International Finance (IIF).
This trend underscores the sustained fragility in global investor confidence toward Africa’s most industrialized economy, which has struggled to attract consistent portfolio inflows due to low growth, weak earnings outlooks, and policy uncertainty.
Despite a relatively strong stock market performance in 2025 — with South African equities delivering a 29% return in dollar terms, placing them among the top five performers globally, just behind Greece, Spain, Germany, and Italy — international investors are still not convinced to stay long-term.
The IIF’s data reveals that the current streak of equity outflows is more than double the combined total of $1.9 billion pulled out in 2023 and 2024. So far this year alone, non-residents have sold $5.9 billion worth of South African stocks, compared to $4.9 billion in the same period last year.
Analysts say that while global fund managers are increasingly looking to diversify away from the United States, South Africa is failing to position itself as a top destination, despite relatively low stock valuations.
“Investors are looking to diversify outside of the U.S., but that doesn’t automatically make South Africa a primary destination,” said Graham Tucker, portfolio manager at Old Mutual Investment Group.
Tucker explained that although South African equities appear “relatively cheap”, the discount reflects deeper structural issues, including a decade of declining per capita income and stagnating economic growth.
Indeed, Statistics South Africa recently reported that GDP stagnated in Q1 2025, largely due to persistent contractions in the mining and manufacturing sectors for six consecutive months. These two industries remain core to the country’s export earnings and job creation.
Isaac Matshego, an economist at Nedbank, emphasized that the recent fluctuations in investor interest are more reflective of global economic uncertainty than domestic improvement. “Higher offshore volumes mostly reflect global uncertainties, as the country’s growth fundamentals have not improved significantly,” he said.
Interestingly, despite the persistent net outflows, the Johannesburg Stock Exchange (JSE) recorded over 30 billion rand in foreign stock purchases last week alone, marking the highest weekly inflow in years. However, this was almost completely offset by sales worth 24.70 billion rand, underlining the volatile, short-term nature of recent trades.
According to market observers, many of these investors are behaving like “tourists” — coming in briefly to take advantage of specific rallies, especially in gold and mining stocks, only to exit once the opportunity passes.
“Foreign investors, if anything, behave like tourists. They will come for a trade, especially in gold stocks when the commodity runs, but they won’t stay without long-term policy certainty,” Tucker added.
While emerging markets like Brazil, Turkey, Taiwan, and South Korea attracted fresh capital in May 2025, South Africa continues to lag behind its peers. Latin America in particular is emerging as a major beneficiary of shifting global fund flows, thanks to stronger fundamentals and political reforms.
As the global financial climate evolves, analysts warn that South Africa risks missing out on the broader reallocation of global capital — unless it urgently addresses core investor concerns such as policy transparency, structural reforms, and a clear growth agenda.
Until then, the country’s capital markets may remain stuck in a cycle of inflows followed by swift exits, limiting their ability to support the real economy or reduce dependence on debt-driven fiscal measures.
