Why are local investors so pre-occupied with what foreigners are doing when it comes to the JSE, asks Rowan Williams-Short, CIO at Orthogonal Investments SA?
He contends that investment professionals shouldn’t be too concerned about foreigner investors and whether they are buyers or sellers of SA equities and the JSE. His research shows that the correlation between whether foreigners are buyers or sellers of the JSE and the movement of the JSE is in the region of 0.0000012%.
In fact Williams-Short contends that foreign investors are more ‘stupid’ than local investors, and they – the foreigners – are generally trading against each other. One simply has to look at the facts over the recent past, he says, pointing to the activity on the JSE in January and February. The local market took a hammering in January and foreigners were net sellers of SA equities and the JSE. However, the market rebounded to the tune of 27%, in February and yet foreigners remained net sellers.
Makes you think, doesn’t it?