South Africa’s stock market has seen a $3.7 billion loss as foreign investors pull out, marking the longest period of equity outflows in five years, according to data from the Institute of International Finance (IIF).

Since October 2024, foreign investors have withdrawn a substantial $3.7 billion from South Africa’s local stock market, nearly double the $1.9 billion outflows recorded from 2023 through early 2024, a Reuters report highlighted.

This trend points to rising hesitation among investors toward stocks on the Johannesburg Stock Exchange (JSE), despite its position as one of the best-performing global markets this year.

Bank of America reports that South African equities have delivered a 29% return in dollar terms year-to-date, placing them among the top five global performers behind Greece, Spain, Germany, and Italy.

Nevertheless, this strong performance has not been enough to sustain foreign investor interest.

Graham Tucker, portfolio manager at Old Mutual Investment Group, commented, “Investors are looking to diversify outside the U.S., but that doesn’t automatically make South Africa a top destination.”

He added that while South Africa’s stock market appears attractively priced, this valuation reflects over a decade of economic stagnation and falling per capita income, which contribute to cautious investor sentiment.

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Meanwhile, other emerging markets are seeing increased inflows. Data from the IIF shows countries such as Brazil, Turkey, Taiwan, and South Korea attracting capital as fund managers diversify away from U.S. assets.

In contrast, South Africa risks missing out on this shift. Although trading volumes on the JSE have increased recently, foreign investment remains volatile.

Exchange figures reveal that in the previous week, foreign investors purchased stocks worth more than 30 billion rand (around $1.6 billion), the highest level in years, but also sold about 24.7 billion rand ($1.3 billion) in the same period.

Just weeks into the second half of 2025, non-resident investors have been net sellers of $5.9 billion in equities, nearly $1 billion more than in the same period in 2024.

Tucker further explained, “Foreign investors tend to behave like tourists. They’ll come for a trade, especially in gold stocks when the commodity is booming, but they won’t stay without long-term policy certainty.”

While the South African stock market continues to post gains, the country’s economy remains fragile.

GDP growth was flat in the first quarter of 2025, weighed down by six straight months of contraction in the mining and manufacturing sectors.

Economists including Isaac Matshego attribute the capital outflows to broader concerns about South Africa’s economic fundamentals.

“The increase in offshore trading volumes speaks more to global uncertainty than improved domestic confidence,” he said.

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