Magnus Heystek, an investment director at Brenthurst Wealth Management, has maintained a critical stance on the Johannesburg Stock Exchange (JSE) for over a decade, advocating for offshore markets like the USA. Despite criticism, Heystek’s foresight has been vindicated by significant outflows from South Africa and the JSE’s underperformance compared to global indices.

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By Magnus Heystek*

Moving away from the abyss

It’s no secret I have been negative on the outlook for the Johannesburg Stock Exchange (JSE) for more than a decade, preferring offshore markets—especially the USA—for long-term equity investors. Understandably these comments have made me very unpopular in certain circles, mostly amongst local asset managers, who had the most to lose from investors following this advice.

I’m flattered that they think I could persuade thousands of SA investors to move their funds offshore, as they have in great numbers, based on the official statistics from the SA Reserve Bank, which shows a massive outflow of funds from SA over the past nine years and more. South African equity investors now have more money inveted in global markets than they have in the local market, according to some reports.

Overall, investors who externalized some of their funds have done very well indeed, as one can see from the following performance numbers.


This clearly shows that the JSE has been the runt of the litter for more than 10 years now. When one looks at the rand values today of a million rand invested into each of these four indices, one realizes the truly horrific opportunity cost of sticking with the JSE.

R1m invested on the JSE  10 years would be worth R2,081m. today

Compare this with values of R4,350m (MSCI), R5,761m (S&P500), and an astonishing R9,761m for the Nasdaq over the same period.

The JSE barely kept pace with an inflation rate of about 6% over the decade.

Couple that with a stagnant residential property market, and one can understand the financial pressure of SA’s middle class today.


Let me recap why I preferred global markets since about 2013/14.
Having returned from an investment tour of the USA in 2012, during which time I attended investment presentations by Facebook, Google, Amazon, Tesla, and Starbucks, amongst others, I realized that SA investors were missing out on this bull run as local funds provided very limited exposure to these fast-growing sectors.

As a consequence, I arranged with certain global asset managers such as Franklin Templeton, Fidelity, and others to have their tech-orientated funds listed on the MWI platform in Guernsey to obtain exposure to these funds and sectors.

The reaction I received from other commentators and even colleagues was pretty damning, and in some cases downright vicious. But as the years unfolded the outperformance of the global markets and the Nasdaq became too large to ignore, despite local fund managers trying desperately to make a case for local investments.

Read more: Magnus Heystek: The JSE’s slow demise as Ramaphoria turns to Dysphoria

I took note of these arguments but was never swayed to change my view.

I tracked many economic and political indicators over these years –and still do–to see if the investment case for SA/JSE was improving or not. I looked at things like economic growth, balance of payments, stock market valuations, levels of innovation, and factors such as credit upgrades/downgrades and the greylisting of SA’s financial industry as pointers to formulate a view on the market.

There were many more reasons for this downbeat view of the JSE, including continued de-listings, bad economic management by the ANC, destruction of the infrastructure, and the poor performance of Eskom.


Most people, including certain ever-upbeat commentators and economists, are not aware of how close the SA economy came to the abyss. Kuben Naidoo, former deputy governor of the SARB and now at Investec Bank, made this admission two weeks ago, during a press conference discussing Operation Vulindlela.

Operation Vulindlela was kickstarted by former Finance Minister Tito Mboweni in 2020 to unleash South Africa’s economy by driving reforms in key sectors such as electricity, logistics and broadband spectrum. These sectors, commonly referred to as network industries, have traditionally been dominated by the government through state-owned companies and are tightly regulated. No competition was allowed in these industries, and the private sector was effectively locked out of generating electricity, running trains on South Africa’s railways, or operating port terminals.

This has recently changed with the introduction of Operation Vulindlela. Through its various phases, it aims to increase competition in these industries by drastically liberalising markets.

Former Reserve Bank deputy governor, Kuben Naidoo, said these interventions from Operation Vulindlela saved the South African economy.

“Not many people are aware that 18 months ago, South Africa was pretty close to falling off a precipice,” he said at a conference hosted by SA-TIED and the Presidency two weeks ago.

These comments largely vindicate the alarm bells I have been ringing for some time and are a riposte to comments by local asset manager Adrian Clayton  from Northstar, who had the following to say about me on Linkedin in 2023, as a comment on another asset manager, Tiaan Fourie, who makes a habit of using this platform to vent his anger at my views:

“The problem with our industry is that powerful, charismatic personalities ‘arbitrage’ an uncertain future – they capitalize on misinformation. There’s no model, no data integrity, just opinion and personality. And an unsuspecting, disempowered investor base believes this rubbish!”

Well, it hasn’t been rubbish, as even Rueben Naidoo, former deputy governor at the SA Reserve Bank, who broke rank two weeks ago, admitted that SA WAS peering over the abyss at the end of 2022. This was quite an admission from someone at the heart of our unfolding financial catastrophe.

Read more: Magnus Heystek on the JSE, the ANC, and 2023 – 2024 investment & disinvestment trends

And I also don’t get the “disempowered investor base” part of the comment. The only ones who were disempowered were local asset managers who saw their businesses shrink in real terms.

In all, the ten years from 2013 to 2023 were a toxic environment for equity investments, especially compared to world markets such as the S&P 500 and Nasdaq  that were booming during this time—and still is.

In short: investors who avoided global markets, either out of fear or the urging of their biased advisors and media commentators, have experienced massive opportunity costs (lost profits) within their investment portfolios.


I have always steadfastly indicated that “ when the facts change,I will change my views”.

One of the key financial indicators I track is the net buying and selling of foreigners of equities and bonds on the JSE. Probably the biggest single factor depressing the JSE has been the massive exit from the JSE by foreign investors, mostly large fund managers and pension funds.

Cumulative outflows from the JSE’s bond and equity markets since 2019 now stand at over R1,711 trillion rand—with each year recording a larger outflow. It remains my view that any talk about a “booming JSE” is premature before this outflow is halted and we see a return of foreign investors back to our market. For that to happen, we need to (a) get off the grey list and (b) improve our investment grade rating.

But yes, we have started to see some positive flows into our equity and bond markets, and as undertaken, I need to point out that foreigners have been net buyers of SA equities and bonds over the past few weeks which has resulted in a very welcome uplift.  Long may it continue.


See attached charts and tables, as supplied by fund manager JC Louw at Custodian Asset Management.


Other positive signs include:*

  • *SA Budget reported its first primary budget surplus in 15 years.
  • * Three months of no load-shedding by Eskom.
  • * A peaceful and globally endorsed general election.
  • * Slight improvement in the mood of businesspeople and investors.
  • *Signs that interest rates have peaked, and we could start seeing one, maybe two, interest rates before the end of the year.

There have also been the first signs, very faint and hesitant at this stage, of an improvement in the commercial property market if one judges by comments made in the financial report by Growthpoint, SA’s largest property owner. Office vacancies in Gauteng are starting to decline and rental renewals are not dropping anymore.

The Listed Property Sector on the JSE (+10,8%) has improved very nicely, almost under the radar, and over the past 6 months has outperformed the JSE  which is up by 5,8%. Over one year the outperformance is even better, with a return of 27% versus 9,34% (JSE).

It proves once again, that no one rings the bell at the bottom of a market cycle.

So the question is: have we reached the bottom? Is this the start of the upturn? Will the JSE offer investors better real returns over the next 5 to 10 years?

No one knows, but I get a sneaky suspicion it cannot get worse. Here’s hoping.

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*Magnus Heystek is investment director at award-winning Brenthurst Wealth Management.