Overseas investment in South African stocks hit a record high for the second year running in 2006, Bloomberg reports, as foreigners sought to profit from the longest period of uninterrupted economic growth in the country's history.

Foreigners invested a net R73.7-billion in SA's stock exchange in 2006 - up by 47% from 2005 - buying R480.8-billion of shares on the JSE and selling R407.1-billion, in the process driving the benchmark All Share index to a succession of all-time highs.

South Africa's economy shrugged off a string of interest rate hikes in the third quarter of 2006 to notch up its 32nd quarter of growth since 1998 - the longest sustained upswing in the country's history.

Bloomberg put this growth down to an expanding black middle class, increased government spending and surging prices of gold and platinum, the country's biggest exports.

"At the same time, government pressure on companies to boost black participation is boosting the wealth of blacks, so pushing up sales of everything from cars to clothes and boosting corporate profits," Bloomberg stated.

Centaur Asset Management's Warren Goldblum told Bloomberg that foreigners were "increasingly looking at emerging markets for growth opportunities on the back of the commodities boom," adding that greater spending on construction was also helping to boost growth in South Africa.

According to Statistics SA, construction activity rose by 14.3% in the third quarter of 2006, with real value added by the industry over the first three quarters rising by 13.2% compared to the first nine months of 2005.

The government, partly in preparation for the 2010 Fifa World Cup, plans to spend in the region of R410-billion on infrastructure development over the next three years.

Source: SouthAfrica.info

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