Capital outflows are a key feature of offshore finance.
They often signal the mismatch between where significant wealth is generated and where people want to live — or at least domicile their wealth.
During my time working in the offshore industry in Europe, I observed plenty of wealth from South Africa. The mining industry there generated large-scale wealth creation.
This also led to highly unequal wealth concentration in the country. By some estimates, the top 10% owned up to 95% of all wealth during apartheid.
Aerial view of Johannesburg. Source: South African Tourism / Flickr
Affluent South Africans have allocated capital to offshore investments in large numbers.
The drivers are pretty consistent:
- Rand volatility and long-term depreciation risk. (Over the past 20 years, the rand has lost roughly 75–80% of its value against the USD.)
- Political and policy uncertainty (shifts in governing coalitions).
- High taxation and desire for more predictable regimes.
- Portfolio diversification into hard currency assets (typically in USD, EUR or GBP).
- Better global opportunities (wider industry sectors).
- Financial privacy and estate planning.
Despite these push factors, several sectors within the country are still expanding rapidly. This attracts global capital and generates wealth for South Africans.
In particular, we are seeing strong investment in renewable energy, grid infrastructure, transport networks, agriculture, global outsourcing, and mining — with a shift toward battery metals and rare earths.
With the depreciation of the rand, many South Africans often feel wealthier outside the country than inside it. This creates opportunities both for expat investment back into South Africa, and offshore allocation.
For those with a deep understanding of the risks within South Africa, some equities may present as undervalued. The average P/E ratio on the Johannesburg Stock Exchange is around 9.7, which is cheap by global standards. Though other more stable markets (and currencies) may currently appeal to us more — for example, Italy at around 13.9.
Today, I want to look at a business that began in South Africa, but today is very much global.
It could allow investors to gain exposure to South African wealth, both within that country and beyond…
Your first Quantum Wealth Report is waiting for you:
