South Africa’s domestic institutional investor base — incorporating public & private pension funds, unit trusts and insurance — is the largest in Eastern Europe, the Middle East and Africa (EEMEA), in absolute terms, as well as in percentage of GDP.
Data from Bank of America showed assets under management (AUM) by institutional investors exceeded $1-trillion at the end of the third quarter of 2025 and represented more than 230% of GDP.
In comparison, assets held by institutional investors in Turkey amounted to 19.9% of GDP, Poland 28.3% and Hungary 39%.
“South African institutional investors consistently favour equity over fixed income in their asset allocation. In the third quarter of 2024, equity instruments constituted 50%, 66% and 57% of AUM by pension funds, insurance and unit trusts, respectively. Throughout 2025, allocations across market segments across all the investor categories were relatively stable,” the Bank of America report reads.
The fixation on equities over bonds by South Africa’s institutional investors has put them in good stead following the 2025 rally by the JSE, which went up 61.2% in dollar terms year on year.
Bank of America data shows that South Africa and Saudi Arabia are the largest equity markets in the EEMEA, accounting for 55% weight in the index.
We forecast South Africa’s real GDP growth to improve to 1.5% in 2026, from 1.36% in 2025, buoyed by rising consumption and domestic investment. Household consumption remains the main driver of economic growth.
— Bank of America
“However, their share in total profits is gradually declining and is now at 43% of total. In fact, in terms of profitability, the UAE [United Arab Emirates] has overtaken Saudi Arabia to become the second most profitable market with some 21% share,” Bank of America said.
“The next largest markets after South Africa (32%) and Saudi Arabia (23%) are the UAE, Poland, Qatar and Kuwait. Share of profits generated by those markets stood at 21%, 8%, 7% and 5%, respectively.”
South Africa’s turnaround story should continue in 2026, with steadily rising GDP growth and moderating inflation paving the way for three more rate cuts, according to Bank of America.
The lender said gold and platinum group metal (PGM) prices are likely to boost external balances, leading to a current account surplus.
“We forecast South Africa’s real GDP growth to improve to 1.5% in 2026, from 1.36% in 2025, buoyed by rising consumption and domestic investment. Household consumption remains the main driver of economic growth,” Bank of America said.
After stagnating at around 4% over the last two years, private sector credit extension is now growing faster. It reached 7.8% in November 2025, the highest pace since February 2023. The rise has been pronounced since May 2025.
“While the average has increased to over 7%, we see notable differences between households and corporates. Corporate credit growth is expanding faster, at over 10%, relative to household credit extension, at around 3%. The credit cycle is benefiting from cumulative interest rate reductions and a low inflation environment.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.