S.Africa investor index dips in Q2 on uncertainty

Investor confidence in South African assets eased in the second quarter of this year, pointing to overall uncertainty among fund managers, compilers ETM and Maxim said on Thursday.

The Maxim-ETM Investor Confidence Index dropped to 99.1 in Q2 from 107.1 in the first quarter, a statement said.

The index monitors actual data to determine how fund managers are shifting their money between equities, bonds and money markets in South Africa.

"The lack of growth of overall fund inflows in Q2 2011 is symptomatic of a tight monetary environment, weighing on equity optimism and making the fund management sector that much more competitive," market analysts ETM and Maxim said.

Available data pointed to a slowing in the momentum of new domestic funds flowing into bonds during the quarter as rising inflation diminished the attraction of debt for local investors.

The slight dip in the bond market allocation had been absorbed by increased flows to the money market.

"Perhaps the expectation that the (Reserve Bank) would raise the repo rate by Q3 2011 kept investors interested in money market investments," ETM and Maxim said.

The central bank has kept the key repo steady so far this year and some analysts are increasingly betting that the Reserve Bank will keep rates at 30-year lows for the rest of the year as the economy continues to struggle after a recession in 2009.