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In today's blog post we take a look at the total value of shares traded on the JSE buy foreigners. What percentage of total trade on the equity market is made up by foreign buyers? And what percentage does derivatives make up compared to general equity trades? We take a look below.
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What percentage of equity trade is made up by foreign traders?
For the year to date (Start of January 2018 to week ending 8 June 2018) foreigners have traded a total Rand value of R1 072 339 515 106 . Basically foreigners have bought and sold a total of R1trillion so far in 2018 on the JSE equity market. Total trade so far in 2018 on the JSE equity market amounts to R2 569 144 090 978 or R2.57trillion. Thus total trade of foreigners on the JSE equity market equates to roughly 41% so far in 2018.
During the same time period in 2017, foreigners traded around R850billion worth of equities, while total equity trade on the JSE was recorded at R2.28trillion for the same time period in 2017. So for the same time period in 2017, 37.3% of total equity trade on the JSE was made up by foreign traders. So from 2017 to 2018 there has been increased participation of foreign traders on the local market. While this shows foreign interest in SA listed shares, it has to be noted foreigners have been net sellers of equities on the JSE for the last 6 weeks (see this article)
Lackluster economic growth numbers, political uncertainty with issues such as expropriation of land without compensation, a weak currency, strong dollar and strong economic growth in the developed world are the main drivers for the exodus of foreigners out of the SA stock market in recent weeks.
Total value traded in geared instruments vs standard equities
So sure it is fun to trade in geared instruments as one gets increased exposure with less capital, but of course increased risk as one can lose more than the initial investment made. So how does the value traded in derivatives compare to trade in equities? We take a look below.
Year to date total value of derivatives traded amounts to R16 627 926 230 or R60.6billion while total equities traded year to date as mentioned above amounts to close to R2.57trillion. Thus derivatives traded value only makes up 0.65% of total equities traded. While in 2017 for the same time period derivatives traded was recorded at R21billion (or 0.92%) of the equities traded during the same period. Thus the percentage of derivatives traded in 2018 is lower than that of 2017. Are investors running scared of geared instruments? Well our advise is to never traded in geared instruments unless you have a solid equity portfolio already and can afford to lose the money you are using or planning to use on geared instruments
Year to date total value of derivatives traded amounts to R16 627 926 230 or R60.6billion while total equities traded year to date as mentioned above amounts to close to R2.57trillion. Thus derivatives traded value only makes up 0.65% of total equities traded. While in 2017 for the same time period derivatives traded was recorded at R21billion (or 0.92%) of the equities traded during the same period. Thus the percentage of derivatives traded in 2018 is lower than that of 2017. Are investors running scared of geared instruments? Well our advise is to never traded in geared instruments unless you have a solid equity portfolio already and can afford to lose the money you are using or planning to use on geared instruments