The Great Migration : 5 Charts that Put South Africa's Socio-economic and Political Inefficiencies Into Perspective
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South Africa's equity and bond markets have experienced a substantial outflow of foreign capital in the first 8 weeks of the year. Unlike previous years, where there were positive net foreign purchases of South African shares and bonds in January and February, 2023 has seen a significant departure from this trend.
The data on total net purchases of shares and bonds, which includes both foreign and local capital, provides a complete view of the departure from South African capital markets. This data reflects the scale of the trend at a more comprehensive level, indicating a noticeable change in investment sentiment away from South Africa.
Consequently, the prevailing market conditions have resulted in a negative start to the year for both equities and bonds in South Africa, which stands in contrast to other global markets such as the United States. This trend highlights the presence of isolated headwind risk factors in South Africa, including political uncertainty, load shedding, and the recent FATF greylisting.
While a definitive causal relationship between the present capital outflows and the recent greylisting by the Financial Action Task Force (FATF) cannot be conclusively established due to a paucity of evidence and data, it is noteworthy that the greylisting has emerged as a significant contributing factor. Recent analysis conducted by the International Monetary Fund (IMF) estimates that in the aftermath of a greylisting, capital inflows typically witness a decline of 7.6% of Gross Domestic Product (GDP), with the typical range of such declines falling between 4.5% to 10.5%.
Talk to you soon!
One of my close friends, Wisani Hlangwane and his colleagues are hosting 'The Economy of You,' On 9 March 2023 in Sandton, Johannesburg.
An event aimed at arming artists, writers, and musicians with the tools to scale the monetization of their craft.
If you are an artist/creator and in the area see the details below.