Informed investors who have followed a phased approach of investing surplus capital offshore have enjoyed significant additional growth to their investment portfolios and overall wealth. However, not all investors who invested offshore during this time have had the same experience. In light of the severe current pessimism in South Africa, it is prudent to remind investors of some of the key pitfalls of offshore investing.
SA equities and the rand have outperformed global markets and currencies for long periods in the past 20 years. Indeed, there have been lengthy periods where the local equity market significantly outperformed the S&P 500 in dollars on a rolling 10-year basis.
Further, there were times when a 10-year investment in the S&P 500 yielded a negative return, while having held the JSE All Share Index was markedly positive. In particular, the period following the technology bubble in 1999 and 2000 resulted in negative returns for the S&P 500 over the following 10-year period. There was a similar picture for the MSCI World Index compared with the South African equity market in US dollars.
Within EM equities, the TOP 40 index in SA is at its cheapest level in 10 years relative to Emerging Market peers after foreign investors have sold $4.5-billion of SA stocks year to date. However, the South African market is cheap for reasons familiar to all of us. The intention of this article is not to make a strong investment case for South African assets relative to offshore assets, but rather to highlight that emotionally externalising assets can potentially be detrimental to investors.
When investing offshore, investors need to remember the most important principles — be careful of following the herd, stay away from investing capital that might be required in the short to medium term and watch out for investing for the wrong reasons.
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
STREET DOGS: It is what it is, except when it isn’tIt just ain’t so that money invested in the stock market always outperforms cash
Read more »
Market data — September 8 2020Market data including bonds and fuel prices
Read more »
SA is flush with barley and needs to find new export markets for itThe alcohol ban added to SA’s barley bounty, and the government needs to prioritise countries for export, such as China, amid strong competition
Read more »
JSE faces mixed Asian markets on Tuesday ahead of SA GDP dataConcern over Brexit and US-China tension is again weighing on sentiment, with local focus on SA’s second-quarter GDP data
Read more »
Corruption casts a long shadow on our public discourseTHOUGHTLEADER: the words commonly associated in news stories with the term ‘Covid-19’ include ‘looting’, it’s time to shine a light on the problem.
Read more »
Juicy Philippines export deal gives SA’s citrus industry a boostSA is set to gain a slice of the Southeast Asian islands market that imported about 117,000-tonnes of citrus between 2016 and 2018
Read more »