A major easing of foreign-exchange controls presents South African money managers with the dilemma of whether or not to move more money offshore.
An amendment to prudential rules announced in last month’s budget enables pension and mutual funds to invest 45% of their assets abroad, up from 30% previously. That’s the largest adjustment yet made to the offshore limit, and gives South African investors the chance to"fundamentally" re-balance their portfolios, said Izak Odendaal, an investment strategist at Old Mutual Wealth in Cape Town.
It’s unlikely that amount would flow out at once, though clients have expressed interest in moving more money abroad, said Victor Mupunga, a senior research analyst at Old Mutual Wealth Private Client Securities. The question is where to? "Maybe investors are panicking about the interest-rate outlook. I don’t think we’re going to see a steep rate path. This is clearly not an economy that’s overheating. It will be gradual."
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