*

Foreign investors pull $3.7 billion from S.African

equities

since October

*

Emerging markets see inflows, but S.Africa struggles to

attract

investors

*

S.African stocks deliver 29% return YTD, among top global

performers

By Sfundo Parakozov, Colleen Goko, Alessandro Parodi

JOHANNESBURG, June 13 (Reuters) - Foreign investors have

pulled $3.7 billion out of South African equities since October

in the longest such streak of outflows in five years, a report

showed, as the continent's biggest equity market struggles to

attract international portfolio flows.

International investor confidence in stocks listed in

Africa's most industrialized economy has been fragile for years,

with equities having suffered annual outflows since 2022,

calculations by the Institute of International Finance show.

But the latest streak marks a sharp acceleration, coming in

at double the $1.9 billion of outflows across 2023 and 2024, the

IIF said.

South Africa is at risk of missing out on moves by global

fund managers reallocating into regions outside of the U.S.

without growth, said analysts, even as stocks trade at discount

prices.

"Investors are looking to diversify outside of the U.S., but

that doesn't automatically (make) South Africa a primary

destination," said Graham Tucker, portfolio manager at Old

Mutual Investment Group.

The local market was "relatively cheap", he added, but that

reflected a decade of declining per capita income and depressed

growth.

Emerging stocks as a global asset class have suffered

outflows more widely since October. But that changed in May when

major emerging stock markets from Brazil to Turkey and from

Taiwan to South Korea attracted fresh inflows, according to IIF

data.

Latin American countries are especially well-placed to benefit

from the U.S. market shifts.

The Johannesburg Stock Exchange has also seen higher volumes

of investments in recent weeks, but rising purchases are matched

by rising sales, the bourse's data shows.

South African equities have delivered a 29% return in dollar

terms year-to-date, placing them among the top five performers

globally behind only Greece, Spain, Germany and Italy, Bank of

America ( BAC ) said.

In the week to last Friday, non-residents bought more than

30 billion rand in South African stocks, the highest weekly

value in years, but that also coincided with heavy selling of

24.70 billion, the JSE data shows.

So far this year, non-residents have been net sellers of

$5.9 billion, a billion more compared to the same period in

2024.

"Foreign investors, if anything, behave like tourists. They

will come for a trade, especially in gold stocks when the

commodity runs, but they won't stay without long-term policy

certainty," said Tucker.

Higher offshore volumes mostly reflect global uncertainties,

as the country's growth fundamentals have not improved

significantly, Nedbank economist Isaac Matshego said.

Data from the country's statistics agency showed last week that

the country's gross domestic product stagnated in the first

quarter, mainly owing to six straight months of contractions in

the mining and manufacturing sectors.

($1 = 17.9439 rand)