Foreigners snap up SA stocks

Johannesburg - Foreign investors flocked to South African equities in 2009, snapping up R75.418bn worth of local shares as appetite for emerging markets rose after worries over the credit crisis lessened.

Data released by bourse operator JSE Ltd on Tuesday showed foreign investors were net buyers of local stocks in 2009, compared to 2008, where sales of R54.439bn outstripped purchases.

Foreigners were also net buyers of South African bonds in 2009, purchasing R23.959bn worth of local bonds versus sales of R16bn in 2008.

"The record foreign buying of South African equities in 2009 was effectively part of a pronounced global trend by investors to accumulate assets in emerging markets," Stanlib Chief Economist Kevin Lings said in a note, adding the increased interest reflected a reduction in global risk aversion.

Local resource stocks were heavily favoured by foreign investors, spurred by higher precious metals prices, which hit record levels in 2009.

Gold prices posted their biggest absolute annual gain in three decades in 2009 as investors bought heavily into bullion, widely favoured as a hedge against economic uncertainties.

Other precious metals such as platinum and palladium also clocked sharp gains for the year.

"Obviously, the interest was mainly on the commodity side where they (foreigners) were buying in a big way. We're still regarded very much as a commodity market by foreigners," said Abri Du Plessis, chief investment officer at Gryphon Asset Management.

The resource-heavy JSE Top-40 index of blue chip stocks gained 29 percent in 2009, while the local resources index notched up 33 percent.

"It's fair to say that what's pushing commodity prices and commodity share prices is a global (economic) recovery," said Du Plessis, adding that he expected foreign interest in South African stocks to remain high in 2010.

- Reuters