A further outflow of around R8 Bn in October brings the total outflows (net selling) by foreigners of SA assets to a whopping R400Bn since late 2013:
One wants to weep when one considers that this is mostly self-inflicted due to poor governance, poor policy frameworks, unbridled corruption, financial mismanagement of SOE’s and outright theft. It’s no wonder foreigners are yanking out money at record levels not even witnessed in the sanction heydays.
But every collapse has a bottom and we may be close. Foreign outflows are but one leading indicator for the JSE and whilst the October R8 Bn outflows are disappointing they seem to be abating.
With the net outflows, we now have a full set of data for the October reading of the Analytics JSE Leading Indicator (JLI)
The percentage of JSE shares posting an increase in earnings and the percentage of shares posting an increased dividend seems to be leading the charge out the bottom, which could be early sign signs of green shoots and assisted in arresting the JLI composite from a further decline in October. When the JLI turns up, we are thinking we are going to see one hell of a rebound, just as the up-turn in the JLI presaged the 2009 bull market.
How long the next bull market will last is more tricky to fathom, but given we are in the late bull and economic cycle in the rest of the globe it’s likely to be much shorter than the 2009-2015 one.
Dwaine van Vuuren
RecessionAlert, Sharenet Analytics
Dwaine van Vuuren is a full-time trader, global investor and stock-market researcher. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT.com (US based) and PowerStocks Research (now Sharenet Analytics) into companies used by hundreds of hedge funds, brokerage firms, financial advisers and private investors around the world. An enthusiastic educator, he will have you trading and investing with confidence & discipline.