By Prinesha Naidoo
(Bloomberg) – South African portfolio investment inflows rose to the highest level in more than a year in the third quarter after the country’s biggest Eurobond sale yet.
Investment inflows increased to R40.2bn ($2.8bn), compared with R10bn in the previous three months, the South African Reserve Bank said in its quarterly bulletin released Friday in the capital, Pretoria. That’s highest since the first quarter of 2018, when sentiment surged after Cyril Ramaphosa won the leadership of the ruling African National Congress and took over as president of the country.
Key insights
- South Africa is heavily reliant on foreign investment inflows to help fund the deficits on its current account and budget. The current-account gap hasn’t dipped below 2% of GDP since the end of 2016 and, together with a budget shortfall that’s projected to be the widest in more than a decade next year, it keeps pressure on the rand.
- The government sold $5bn in its biggest Eurobond sale to date in September and that “more than offset” net sales of domestic debt securities and equities by foreign investors, the central bank said.
- Foreign direct investment of R17bn came into the country in the third quarter, compared with R26.3bn in the three months to June.
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