SA managed to attract foreign portfolio capital inflows at a faster pace in the first quarter of 2012, with the net inflow capital on the financial account amounting to R50.5-billion compared with an inflow of R19.9-billion in the fourth quarter of 2011, the SA Reserve Bank’s Quarterly Bulletin released Thursday shows. 

SA managed the inflows despite a situation where international investors selectively substituted their holdings of emerging-market equity securities in favour of those in developed economies, following the slightly positive sentiment that occurred in the global financial markets in the first quarter. 

Foreign direct investment (FDI) into SA registered a smaller inflow of R7.7-billion in the first quarter compared to an inflow of R18.7-billion the quarter before. 

The FDI could largely be attributed to the continuous strengthening of economic ties between China and SA and the concomitant increase in long-term inward investment.

Foreign portfolio investment into SA increased by R28.9-billion in the first quarter following an increase of R12.5-billion. 

The Reserve Bank said that attractive domestic yields on South African government bonds probably encouraged foreign investors to remain buyers of domestically issued debt securities over the period. 

The increase in portfolio investment liabilities was further boosted by the proceeds from a US$1.5-billion international bond issue by the South African government during the first quarter.