The Quarterly Bulletin (QB), published on Thursday, said that: “South Africa’s direct investment liabilities recorded an inflow of only R0.5-billion (or R500-million) in the first quarter of 2023 following a revised inflow of R64-billion in the fourth quarter of 2022.”

“Direct investment liabilities” basically refers to foreign direct investment, or FDI. It’s perhaps worth noting the use of the word “only” by the South African Reserve Bank, which is typically clinical in its comments. But hey, R500-million – about $26-million – in total FDI inflows is not much in one three-month period, especially when the previous quarter’s total was 128 times larger.

The SA Reserve Bank noted in the QB that “… non-resident parent companies granted loans to domestic subsidiaries. This was countered by the sale of some shares by a non-resident parent company following the listing of its domestic subsidiary in the food products sector on the JSE Limited (JSE)”.

So it seems, perhaps, this was a one-off case linked to this transaction. But clearly, no large foreign direct investments were made in the period to counter that.

South Africa, in the face of the power crisis, rampant criminality, a crumbling road and rail network and enduring policy uncertainty, is simply falling off the global investment radar screen.

Attracting FDI is a key aim of President Cyril Ramaphosa and it is a worthy goal. South Africa’s low savings rate means that the economy needs FDI to underpin any hopes of meaningful growth. And in Q1 of this year, this aim was a big flop.

Meanwhile, the outflow of portfolio investments picked up pace.

“Portfolio investment liability outflows increased from R25.6-billion in the fourth quarter of 2022 to R32.0-billion in the first quarter of 2023,” the QB said.

“Non-resident net sales of domestic debt securities decreased from R25.4-billion in the fourth quarter of 2022 to R18.7-billion in the first quarter of 2023 and were softened by the issuance of an international bond of $1-billion by a public corporation in the first quarter of 2023.”

So foreigners remained net sellers of South African debt, though the scale of the outflow slowed. But South African equities were dumped by foreign investors like hot potatoes.

“Non-residents’ net sales of domestic equity securities of R13.3-billion in the first quarter of 2023 followed net sales of R142-million in the fourth quarter of 2022,” the QB said.

Could they be attracted back by a buying opportunity?

“The overall price-earnings ratio of ordinary shares listed on the JSE declined from a recent high of 14.6 in January 2023 to 11.8 in May as share prices declined and earnings increased to an all-time high.

“The mining sector contributed the most to the increase in earnings, supported by high international commodity prices and the weaker exchange value of the rand,” the QB said.

Also, the JSE-All Share index is down about 17% in the year to date. More than one commentator, including my colleague Tim Cohen, has said that South African stocks are undervalued and a real bargain at the moment.

Read more in Daily Maverick: After the Bell: The ratios and proportions of optimism and pessimism

Will that entice foreign investors to become net buyers of South African stocks again? One of the things, ironically, that the JSE has going for it is the limited exposure of its biggest companies to South Africa. They effectively make most of their money in other countries.

That sadly does not apply to FDI, which is capital that is directed to the building or purchase of business operations in a country. That means any foreign direct investor in South Africa is exposed directly to all of the risks associated with operating here.

Hopefully, FDI inflows will rebound in Q2. But don’t be surprised if they remain a trickle. DM