South African Reserve Bank governor Lesetja Kganyago announces the decision on interest rates in Pretoria on Thursday. Picture: PUXLEY MAKGATHO
South African Reserve Bank governor Lesetja Kganyago. Picture: PUXLEY MAKGATHO

CAPITAL inflows to SA slowed to R142.3bn last year from R150.1bn in 2014 on both global and domestic challenges, the Reserve Bank’s quarterly bulletin showed.

Globally, "bouts of risk aversion" among international investors towards emerging markets and uncertainty in global financial markets, relating to interest rate hikes in the US, declining commodity prices and economic growth concerns in China, were the main reasons limiting capital inflows according to the bulletin, which was released on Tuesday.

"In SA, the inflow of capital was further affected by poor economic growth, a widening in the current account deficit ... as well as credit rating agencies’ negative outlook for economic growth during the fourth quarter of 2015," the Bank said.

Inward foreign direct investment (investment by foreign companies) fell markedly to R22.6bn last year from R62.6bn in 2014 while outward foreign direct investment (investment by local companies abroad) fell to R68.3bn from R83.2bn over the same period.

Inward foreign portfolio investment (foreigners buying local assets such as equities and bonds) increased to R105.6bn from R73.3bn over the same period.

The financial account recorded capital inflows of R53.5bn in the fourth quarter of last year compared with R41.7bn in the third quarter, the bulletin showed.