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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:The historical role of foreign equity portfolio capital in South Africa
Author:Gidlow, Roger
Year:2009
Periodical:South African Journal of Economic History (ISSN 1011-3436)
Volume:24
Issue:1
Pages:69-93
Language:English
Geographic term:South Africa
Subjects:securities
foreign investments
financial market
External link:https://doi.org/10.1080/10113430909511214
Abstract:The role of foreign equity investors on the Johannesburg Securities Exchange (JSE) has a chequered history. The capital provided by such investors has proved to be volatile at times, but such capital has a long history, and has often proved to be crucial. Since the early 1990s there has been a resurgence in the flows of foreign equity portfolio capital into South Africa, which has played a key part in helping the country to finance deficits on the current account of the balance of payments. However, some analysts have been warning that the local economy is vulnerable to an emerging markets-inspired sell-off of local equities by foreigners at some stage, while left-wing organizations such as Cosatu allege that foreign equity inflows onto the JSE are highly speculative, and have helped to create an environment in which the rand is overvalued, leading to job losses in areas such as the manufacturing sector. This paper reviews the historical role of such equity flows in and out of South Africa, with special emphasis on the period since the 1980s. Furthermore, it outlines the current scale and nature of such equity funds, and assesses future prospects in this regard, since the sustainability of inflows of these funds will be crucial in determining the future of the rand, and domestic interest rates. Ref. [ASC Leiden abstract]
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