Today’s post by Gabriella Neilon shows that the yield on South Africa’s foreign liabilities has consistently exceeded the yield on its foreign assets by a wide margin. This is driven by the higher returns on direct and non-direct (portfolio and other) investments within South Africa compared to the returns on South African investments abroad. Contributing factors include the strong profitability of certain domestic companies (such as Naspers), relatively high inflation, expectations of currency depreciation, and elevated domestic risk premia. For more on the implications of the structure of SA’s foreign asset portfolio see here.
