FOREIGN CAPITAL INFLOWS AND STOCK MARKET PERFORMANCE IN SOUTH AFRICA

Abstract

This study sought to examine the impact of foreign capital inflows and stock market performance in South Africa. To facilitate the study, research questions were designed which was hinged on the objective of the study and examined the relationship that seems to exist between impact of foreign capital inflows and stock market performance in South Africa.. Secondary data was collected on four variables namely fixed direct investment, fixed portfolio investment, remittance and other development assistance (ODA) between 1990-2022. The study result showed that that foreign direct investment has a positive and statistically insignificant relationship with stock market performance in South Africa. It was further discovered that foreign portfolio investment has a negative and statistically insignificant relationship with stock market performance in South Africa. It was also discovered that other development assistance(ODA) has a positively and statistically insignificant relationship with stock market performance in South Africa. Lastly it was also observed that remittance has a positive and statistically significant relationship stock market performance in South Africa. The study adopted the dynamic ordinary least square method as technique of data analysis after subjecting the variables to preliminary tests like descriptive statistics, correlation matrix and unit root test. Based on the findings of the study it was recommended among others that; there is need to maintain a stable fixed direct investment in order to strengthen the activities of the stock market, also the constant reduction or fluctuations of fixed portfolio investment be treated as a matter of urgency to aid the promotion of the South Africa stock market. It was further recommended that regulatory policies on remittance should be placed; to regulate its effects on the stock market.