Foreign investors flee South Africa

Press, 12 January 1987, Page 27

Foreign investors flee South Africa

PA Johannesburg Foreign shareholders have joined the business exodus from sanctions-hit South Africa by selling shares on the Johannesburg Stock Exchange in record amounts, officials disclosed.

The Exchange’s chairman, Mr Alastair Martin, told Reuters the net selling of South African shares by foreigners rocketed to 850 million rand (SNZ7S6 million) in 1986.

This was more than double the 1985 figure of 300 nullion rand (SNZ264 million). “There is no sign in the opening days of 1987 that the trend has been reversed, and we expect

the selling probably will continue at a similar rate,” Mr Martin added.

Dealers said the steady, unpublicised selling, mostly by American institutional and private investors, was a clear vote of no confidence in the country and a protest against its apartheid racial segregation. Last year dozens of U.S. companies, including huge corporations such as General Motors and IBM, pulled out of South Africa, citing poor business and pressure from anti-apart-heid lobbyists.

Mr. Martin said the Exchange, the world’s 11th largest, was dealing with a situation "to a large extent out of our hands.” Local financial institu-

tions could continue to readily absorb the substantial disinvestment “but it is clearly undesirable to face a future with no foreign investors,” he commented. Mr Martin expressed confidence that gold, the only booming sector in the otherwise depressed economy, could revive foreign share buying. Profits from gold are the main thrust for the South African economy. Over half export earnings come from gold, which has risen sharply to more than SUS4OO (SNZ76B) an ounce in recent months.

Mr Martin predicted that some foreign investors would eventually be lured back if gold prices held.