A guide to investing in South African stock markets

Thursday, Oct 22 2015 by
A guide to investing in South African stock markets

In 2013 Jim O'Neill, the Goldman Sachs economist best known for coining the term 'BRIC',  noted that 'one popular idea has been to suggest that BRICs should in fact be BRICS, with the capital S for South Africa. Some commentators believe South Africa is a natural member of the BRICs, given its status as Africa's largest, and one of its wealthiest, economies.' The country accounts for 24% of Africa's GDP and is ranked as an upper-middle-income economy by the World Bank. Stockopedia will soon be providing readers with the requisite data for investing in South African stocks. We’ve put this guide together to help you get started.

Why invest in South Africa?

Mining Giant

South Africa has abundant natural endowments, particularly mineral resources. International investors first became interested in the country during the nineteenth century, following the discovery of diamonds in the Cape Province in 1866 and the discovery of gold twenty years later in the Witwatersrand. The subsequent influx of foreign labour and capital transformed South Africa into a regional economic powerhouse. JP Morgan, the American investment bank took a particular interest in the region during the early twentieth century when the firm raised capital to invest in mining operations on the East Rand, and co-founded the multinational mining company, Anglo American plc, in Johannesburg. Anglo American is currently listed on the JSE and remains the world's largest producer of platinum, with around 40% of global output.

Another mining giant based in South Africa is AngloGold Ashanti. The company owns the Ashanti mine in Ghana - one of world's major gold deposits. In 2014 the firm was the world's third-largest producer of gold. Today South Africa is a huge producer of iron ore and it became the third biggest iron ore supplier to China in 2013. The country is also the 6th largest gold producer in the world, not to mention the 7th biggest coal producing country.

Exposure to Emerging Markets

Economic growth in the West has stumbled and slowed since the crash of 2008, while African economies have driven forward. According to the World Bank, Sub-Saharan Africa has grown at around 5% per annum since 2009. Many economists are bullish about Africa’s economic growth over the coming decades. Jim O'Neill has labelled Nigeria as one of the N-11 (or 'Next Eleven') economies which have a high potential…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.

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About Alex Naamani

Alex Naamani

I work as a Financial Analyst at Stockopedia.  As well as contributing to regular site editorial, ebooks and guides - my research contributes to our growing financial databases and product development.  The goal is always to help private investors manage their own portfolios and beat the market in the process.  I have passed the CFA level 1 exam. more »


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