SA offshore assets climb to historic high

January 7, 2016, 5:36am

Economists say the shift is not surprising, given the fall in the rand. Picture: THINKSTOCK

By Hilary Joffe, Business Day Live

INVESTMENTS held by South Africans abroad are worth more than those that foreigners have in SA for the first time ever — providing SA with a buffer that could help curb currency crashes.

Last year’s sharp fall in the rand boosted the market value of the offshore assets owned by South African companies, individuals and institutional investors, while the decline in inward foreign investment, combined with falling share prices on the JSE, has cut the value of foreign assets in SA.

The result is that SA’s net international investment position — which measures foreign assets minus foreign liabilities — is a positive number for the first time since 1956 when the Reserve Bank began collecting data. Figures from the Bank show that the investment position swung from a negative R131bn at the end of June to a positive R113bn — equal to 2.9% of gross domestic product — at the end of September.

Economists said the shift was not surprising, given the fall in the rand. Barclays Africa economist Peter Worthington said to some extent it also reflected flows out of SA over a long period.

"The net foreign asset position is a nice buffer to have. It leaves one more confident that should the currency take a fall, some of the people with foreign assets might decide to bring them back."

Rand Merchant Bank currency strategist John Cairns said the data showed SA was a sizeable saver in global terms. "It would be a good time for all those savers to bring back some of the money, though the data show that local investors tend to be pro-cyclical about the rand — they panic when the rand is weak and take their money out."

However, professional investors, such as pension and unit trust fund managers, might be forced to repatriate some of their assets because of exchange-control rules that limit their foreign holdings to 25%, Mr Cairns said.

The Bank’s figures show South African investors held R5.276-trillion in offshore assets at end-September, which was up 4.6% on the previous quarter on a 9% decline in the effective exchange rate of the rand.