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Definition

The movement of capital into and out of a country as shown in the capital account of their balance of payments. In any financial period there will be people investing into South Africa from outside and South Africans taking money out of the country to invest overseas. Mergers and acquisitions in South Africa by overseas companies result of a flow of funds into this country. Conversely, when a South African company buys a foreign subsidiary then capital flows out of the country. The strength of the rand against first world currencies is a major factor in encouraging or discouraging foreign investment. The stronger the rand is, the more expensive local assets become and vice versa.

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