Capital inflows from foreigners‚ which are key to partly finance the shortfall on SA’s current account‚ slowed in the second quarter‚ reflecting the gloomy global economic environment and muted global risk appetite.
The Reserve Bank’s September quarterly bulletin released on Tuesday showed that foreign capital inflows accounted for in the financial account of SA’s balance of payments amounted to R48bn in the second quarter following an inflow of R50.5bn in the first quarter.
The bulletin noted that concerns about global financial stability and a change in risk perceptions towards emerging market economies again turned investors’ sentiment negative in the second quarter.
The net inflow of capital in the second quarter was largely dominated by inward portfolio investment‚ on a net basis‚ the other investment category recorded a smaller capital inflow over the period‚ the bulletin showed.
Foreign direct investment flows into the country amounted to R5.7bn in the second quarter compared with R7.7bn in the first quarter.
The Reserve Bank said that the recent inward movement of capital mainly reflected the further acquisition of equity and loans granted by foreign parent companies to domestic subsidiary companies.
Despite the gloomy investment climate‚ investors continued to show interest in SA assets.
The bulletin showed that non-resident investors increased their holdings of domestic bonds by R18.9bn in the second quarter following net purchases of R34.9bn the quarter before.
The inward movement of capital was partly neutralised by the redemption of a R10bn international bond issue that matured over the second quarter‚ the bulletin reported. - I-Net Bridge