{"id":597013,"date":"2019-03-07T13:20:03","date_gmt":"2019-03-07T13:20:03","guid":{"rendered":"
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South African stocks are the cheapest on record relative to their emerging-market peers, but they are still not cheap enough for foreign investors.<\/span><\/span><\/span><\/p>\n

Offshore players have been net sellers of South African equities for 11 straight days through Tuesday, the longest streak of outflows in six months, according to JSE Ltd. data. <\/span><\/span><\/span><\/p>\n

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They have sold a net 25.4 billion rand ($1.8 billion) in the year to date, the largest outflow for the corresponding period since Bloomberg started compiling the data in 1999.<\/span><\/span><\/span><\/p>\n

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Johannesburg\u2019s benchmark stock gauge is the cheapest relative to the MSCI Emerging Markets Index since Bloomberg started tracking the data, based on estimated price-earnings ratios, a key attraction for value buyers. <\/span><\/span><\/span><\/p>\n

But stagnant economic growth, worries over electricity supplies and the volatile rand have deterred potential investors in Africa\u2019s biggest equity market, with a capitalization of about $473 billion.<\/span><\/span><\/span><\/p>\n

\u201cChronic economic growth underperformance has exerted a drag on the JSE,\u201d said Jana van Deventer, a Johannesburg-based economist at ETM Analytics. <\/span><\/span><\/span><\/p>\n

\u201cThe fact that foreigners are rotating out of the stock market suggests that the international investor community is not convinced that the growth-enhancing reforms introduced thus far will suffice to kick start the domestic economy.\u201d<\/span><\/span><\/span><\/p>\n

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Inflows into the country\u2019s bond market of 10 billion rand this year have partly offset the stock outflows. <\/span><\/span><\/span><\/p>\n

South Africa relies on portfolio inflows to fund a current-account deficit that swelled to 3.5 percent of gross domestic product in the third quarter of last year.<\/span><\/span><\/span><\/p>\n

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The country\u2019s stock market is missing out on the \u201cwall of money\u201d heading into emerging markets due to a dovish Federal reserve, thawing trade tensions and easing concerns over global growth, according to the Institute of International Finance.<\/span><\/span><\/span><\/p>\n<\/div>\n