Index change prompts record outflows from South Africa stocks

Foreign investors’ sales of South African stocks jumped to a record as emerging-market index changes by compiler MSCI prompted money managers to adjust their holdings.

Net outflows surged to R13.3bn of South African shares on Tuesday, compared with net purchases of R389m in the previous session, figures from stock exchange operator JSE show.

MSCI added twenty-six China shares, 30 equities from Saudi Arabia and eight Argentine securities to its emerging-market stock benchmarks, at the expense of South African stocks in changes that took effect Tuesday. Net sales of Naspers were the largest Tuesday, at R4.9bn rand. Nedbank, Hypro, Bidvest and FirstRand were also in the top five, the JSE figures show.

“South Africa’s weighting went from 6.34% to 6.05% in the MSCI emerging market index,” said Matete Thulare, an analyst at FirstRand Bank in Johannesburg.

MSCI is the world’s biggest index compiler and its emerging-markets index is the most important for the asset class, with as much as $1.8tl in assets benchmarked to it as of June 2018. South Africa’s main stock index was 0.5% higher as 11:03 am in Johannesburg Wednesday.