*This post was sponsored by Shyft, the global money app powered by Standard Bank. Shyft allows you to invest in more than 800 top global companies and ETFs on the New York, London and Frankfurt stock exchanges.
Visit Shyft to download it now, no matter where you bank. Shyft operates under the licence of The Standard Bank of South Africa Limited, an authorised Financial Services Provider (FSP number 11287).
*The content provided is for informational purposes only. You should always do your own research and/or seek professional advice before making investment decisions.
Shyft’s monthly reports cited an 87% increase in foreign exchange purchases this year, indicating that more South Africans are hedging their funds against the rand than ever before.
During the past decade, there has been a notable surge in South Africans looking to diversify their investment portfolios by venturing beyond local borders.
This offshore investing trend is partly facilitated by technological innovation that allows individuals to invest abroad easier than ever before. South Africa has one of the highest rates of fintech adoption in the world, only surpassed by India and China, according to EY’s Fintech Adoption Index (2019).
And the proof is in the pudding. Shyft is seeing significantly more flow this year in comparison to last year. Why? We unpack the data…
Record growth
In May 2024, 87% more forex was bought on Shyft than in May 2023. The growing demand for offshore investing, coupled with the rand’s volatility, contributed to May 2024 marking the app’s best month in terms of value in the platform’s seven years. But these factors are not the only contributors to this significant statistic. Shyft is also gaining market share in the forex and retail sectors.
Why invest offshore?
- Global opportunities: offshore markets have performed significantly better than the JSE over the last five years. Individuals are looking for opportunities that will give them better return on investment, especially in markets experiencing robust economic growth such as the rallying of technological stocks and the artificial intelligence craze in the United States. American stock exchanges are attracting around 90% of the investment flow on Shyft, while European exchanges are growing in popularity.
- Hedging against the ZAR: investors who wish to protect their wealth from currency depreciation are investing in forex more and more as the rand has been gradually and consistently weakening against the dollar every year.
- Political instability and risk management: the rand’s recent spike during the national election and the formation of the Government of National Unity demonstrated just how much investor sentiment can change about South Africa’s future, and how tied the currency is to political news headlines. Spreading investments across other regions and markets, individuals are diversifying risk and reducing the impact of political instability on their funds.
- Technology and the democratisation of global finance: trading apps have revolutionised how South Africans invest, breaking down old barriers to entry and offering opportunities in offshore markets which were very limited in the past.
Fintech adoption is rising at a rate of 100% every two years (2019). As more individuals become comfortable with DIY investment, more South Africans are choosing to use their newfound financial freedom to take advantage of global market opportunities, leading to a surge in offshore investment.
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