Money floods out of SA



South African investors are moving their money out of the country at the fastest pace ever. Portfolio investment abroad jumped to the biggest quarterly outflow on record, the SA Reserve Bank said yesterday in its third-quarter report. Investors more than doubled the amount sent overseas to R24.2-billion in the period, from R10-billion in the previous three months, the central bank said."The exceptional weakness of the rand has made retail investors very nervous," said Rhynhardt Roodt, an analyst at Investec Asset Management (Pty) Ltd, which oversees about $105-billion. These investors, "who did not have a lot of their capital offshore two or three years ago, are starting to do it now. You could argue that the horse has bolted."The rand fell to a fresh all-time low against the dollar yesterday, under pressure from a possible interest rate increase in the US next week, credit rating downgrades and a worsening trade outlook.A China-led commodity rout this year could slow economic growth to its lowest pace since 2009, according to central bank forecasts. The country narrowly avoided a recession during the third quarter, posting annualised expansion of 0.7%.Pessimism about the country's political and economic environment, and the rand's decline, have created a negative feedback loop, said Jean-Pierre du Plessis, fixed interest strategist at Prescient Investment Management."The rand's declines in 2001 and 2008 were more to do with a global crisis when, in fact, South Africa's economic position was much stronger," Du Plessis said."Now, the country has become more vulnerable, as evidenced by the recent ratings movements, while dollar strength and weaknesses in emerging and commodity-producing countries are also responsible."