Observers warned that a downgrade on the local-currency rating by both agencies could trigger a sell-off of up to $12 billion in the country’s bonds and heavy selling in the rand currency, potentially reversing recent gains in the equities market.

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Given current global market risks, South African investors are shying away from riskier equity exposure.

“When asked how the current uncertainty surrounding international politics and world events affected their investments, almost two-thirds (64%) of South African wealth investors said they don’t want to take on as much risk now and almost half (46%) said they are holding more money in cash now than before,” Doug Abbott, head of business development at Schroders South Africa, said told BusinessTech.

South African investors, though, remain optimistic about the future outlook. Despite the political and financial instability currently facing South Africa, local investors project average annual total return of 13.3%, compared to the global average return of 10.2%.

For more information on the South African markets, visit our South Africa category.