Foreign Investors Return to JSE as South African Stocks Outperform Global Markets

South Africa’s stock market is catching the eye of foreign investors again — and it’s been a long time coming.

For eight straight trading days, non-resident investors have been net buyers of shares on the Johannesburg Stock Exchange (JSE), marking the longest streak of foreign equity inflows since August 2022. While the daily inflow has averaged just R376 million — modest when compared to the heavy outflows of over R1 billion per day earlier this year — it signals a notable shift in sentiment.

After years of foreign selling driven by slow economic growth, a volatile rand, and political uncertainty, global investors seem to be reconsidering South Africa as a viable option — especially as they search for alternatives to pricey US stocks.

A Rebound in the Face of Global Headwinds

Year-to-date, foreign investors have pulled $4.9 billion from the JSE. But April brought a turning point. Following a steep dip triggered by President Donald Trump’s April 2 tariff shock — which sent the FTSE/JSE All Share Index down over 9% — the local market rebounded sharply.

The index has since rallied to record highs, supported by booming gold prices that lifted mining stocks. The rand, too, has made up lost ground, strengthening against the US dollar and giving dollar-based investors a tidy 13% return this year. That’s in stark contrast to declines seen in the S&P 500 and the MSCI World Index, making the JSE a relative outperformer.

Why Investors Are Looking Again

Despite the strong run, South African stocks remain attractively priced. The FTSE/JSE All Share is trading at a forward price-to-earnings ratio of 14.7, well below the 19.4 multiple of the MSCI World Index. That valuation gap may be what’s luring value-focused investors back in, particularly as developed markets wobble under the weight of higher interest rates and geopolitical tensions.

But some context is crucial: these inflows are still small and follow a long and painful exodus of capital. The shift may be cautious — even fragile — but it reflects a growing perception that South Africa offers better risk-adjusted returns than many had assumed.

The question now is whether this momentum can last. Much will depend on whether local reforms can support growth and whether global market volatility continues to push capital into undervalued emerging markets like South Africa.

For now, the tide of foreign capital, even if modest, is flowing back into the JSE — and that’s a welcome change for a market that’s long been written off.

{Source: BusinessTech}

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