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Non-residents were net buyers of R24.8 billion of government bonds on Friday, the biggest one-day inflow since 2019, according to JSE data compiled by Bloomberg. Inflows last week totalled R41.3 billion, according to data reflecting settled trades.
Anders Faergemann, a senior portfolio manager at Pinebridge Investments, said the purchases reflect strong returns for South African bonds this year.
Even as yields on benchmark 10-year bonds drop, they still offer a pickup of more than 5 percentage points over US Treasuries.
“We believe that the South African Reserve Bank’s credibility and high real yields, especially on a forward-looking basis, make South Africa an attractive destination for foreign bondholders,” said Faergemann, who is based in London.
Prices are spiking as foreign investors rush into the market. On Monday, yields on South Africa’s benchmark bonds extended declines for an eighth straight day, hitting the lowest level in over seven years.
Sergei Strigo, co-head of emerging-market debt at Amundi, said the bonds are attracting international investors because terms of trade remain supportive, inflation dynamics are benign and “geopolitical noise seems to have quieted down for now.”
South Africa’s consumer price index is forecast to edge higher to 3.6% in August, and the central bank is seen keeping interest rates on hold this week at 7%.
“The curve continues to be steep and thus attractive for international investors,” said Strigo.
Issued on Daily Investor by Bloomberg | https://dailyinvestor.com/investing/102077/money-flooding-into-south-africa-4/
