Foreign investors pile into JSE: Best inflows in 6 years buoy SA shares

Although the stockbroking firms and investment houses usually keep client research out of the media, UBS South Africa agreed to make an exception in this case. The data was drawn from the JSE and is in the public domain. UBS’s Donald Reid, who gave us permission to republish, says he often gets inquiries about portfolio flows, so keeps a close eye on the numbers. And as his research shows, the JSE had a spectacular quarter. South Africans often get caught up in their own troubles. But on a relative basis, we’re not doing too badly. Sometimes it takes the foreigners – and their money – to show us that. – Alec Hogg  

From Donald Reid, UBS South Africa

The last two weeks has been nothing short of remarkable in terms of foreign activity on the JSE.

Up until two weeks ago foreign inflows onto the JSE were flat year to date.  In the last two weeks this has dramatically turned with Q1 turning into the biggest quarter for foreign inflows onto the JSE in the last 6 years.

The below chart illustrates this point. At first we thought that this was an anomaly in the data. As a normal course of action Aveshen does adjust the data by excluding report only trades which can at times skew the results. The other possibility was a large single trade, however these net flows have come in steady increments ranging between R1bil-R2bil per day spread between a cross section of stocks.

Furthermore what makes this picture even more interesting is that it includes a very large net sale in Aspen of R7.3bil which would increase the inflows even more if excluded. What also needs to be remembered about this data is that it only reflects long only money as hedge funds generally trade on swap. If the flow of hedge funds has followed a similar pattern the true foreign inflow onto the JSE would be substantially larger.

Foreign inflows

Q1 most bought and sold

While the Q1 data below may look interesting, it is really in the month of March where all the action happened. That said there are a few interesting stocks that stand out, most notably in the property space. I find it surprising to see Redefine, Hyprop and Resilient on the most bought list, although my understanding is that this was related to REIT index inclusion.

Shares bought and sold

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