Leila Fourie, the head of the JSE, Africa’s biggest stock exchange by market value, says the rate of capital leaving the country is the one thing that keeps her awake at night.
SA needed to do more to make an investment case for the country, she said during an interview on a Business Day Spotlight podcast.
“I sleep very well normally but if something were to steal my sleep from me, it would be foreign flows,” said Fourie, who returned from Australia to take up the JSE position in October 2019.
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According to the JSE, foreign investors have bought a net R45bn of local bonds year to date, having offloaded R62bn in the same period in 2020. They have sold R87.13bn of stocks in 2021.
Fourie said the current uptick had been driven by international investors — who make up a large part of the market — starting to search for yield.
Foreign investors reduced their holdings of local bonds in 2020 as the country was hit by the economic shock of the Covid-19 outbreak, which also came as SA lost its last remaining investment-grade rating.
Appetite for local bonds has since returned as record-low interest rates and bond buying by major central banks made local yields enticing, while the stock market got a boost from surging commodity prices and gains by technology stocks, with the local bourse dominated by Naspers and Prosus.
In addition, recent policy and economic reforms introduced by the government have worked to increase confidence in SA, Fourie said. However, more can be done.
“I am concerned about the disinvestment from SA, and I think as a country we need to do more to put out a positive narrative and to start to create a coalition of the willing between the public and private sector to try and crowd in more financial support and more inbound investment.”
The JSE was faring very well in comparison with the rest of Africa, Fourie said, but unfortunately “the JSE’s relevance in global indices has contracted as a result of other countries crowding SA out”.
The JSE now makes up about 3% of the MSCI Emerging Markets Index, where in previous years it comprised up to 14%.
But it is not all gloom and doom, the JSE boss said, pointing to some of the successes experienced by the local economy.
“In terms of what we’re doing well as a country,” Fourie said she’s been impressed with the public-private partnership that had evolved through the crisis. “I’ve also been impressed with the innovation and the entrepreneurial thinking that we’ve seen coming out of the crisis.”
To aid SA’s entrepreneurial effort, the JSE recently applied for a licence to start a private placement market that will provide a platform to list infrastructure-related debt instruments, as well as shares in small and medium enterprises. That follows a £4m investment for a minority stake in UK fintech company Globacap Technology, which will enable the JSE to digitise its private placement platform and registry services.
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