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After nearly three months of incessant sales, foreign investors are cautiously returning to the South African bond market
Non-residents have been net buyers of the country's public debt for the second week in a row. Inflation in South Africa is lower than badysts' estimates.
Entries were low: about 1.6 billion rand since June 9, against nearly 60 billion rials in the second quarter, according to data from the Johannesburg Stock Exchange. But it marks a turnaround compared to the 11 consecutive weeks of take-off caused by a stronger dollar and a rise in US Treasury rates. "The stabilization of sentiment has led to a return of flows to bond markets," said Richard Segal, a senior badyst based in London at Manulife Asset Management. "In South Africa, however, the weaker than expected inflation data in June was a positive and bullish surprise, baduming the news flow remains relatively calm then probably so, the influx will continue." [19659002Whilethethreatofmoretariffsbetweentwooftheworld'slargesteconomiesremainsSouthAfrica'sreturnsarehighenoughtooffsetthemarketsAmongthemajoremergingmarketsonlyBrazilandTurkeybothunder-investedratedofferbetterreturnsLocalcurrencybondsofSouthAfricaareratedBaa3thelowestinvestmentlevelatMoody'sInvestorsService
Foreign sales of South African bonds fell to 40.2% in June, up from 42.8% in March, according to National Treasury data. Reference yields climbed about 85 basis points over this period, as debt fell 17% for dollar investors.
Up to now this quarter, the country's bonds have gained 3%. , Brazil and Mexico among 19 emerging markets followed by Bloomberg Barclays indices. These gains could accelerate in the coming months, Standard Bank Group Ltd. anticipating that the benchmark 2026 yield would be 8.3% at the end of the year, compared with around 8.75% on Monday.
© 2018 Bloomberg L.P
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