Sell-off means foreign investors hold lowest level of bonds in over a year
The outflows since April have occurred against the backdrop of a broad sell-off in emerging-market assets sparked by a stronger dollar and rising US rates
Foreign investors’ holdings of South African bonds have dropped to the lowest level in more than a year following a record sell-off since the beginning of May, and a senior Treasury official says there could be worse to come. Nonresidents held 38.9% of government debt as of June 22, down from as high as 42.8% in March, according to Bloomberg’s calculations based on Treasury data to the end of April and JSE data for May and June. Foreigners piled into South African debt in the first quarter on optimism that new president Cyril Ramaphosa would undo the economic havoc wreaked by Jacob Zuma. But the flows started dwindling in April before turning into a flood of sales, reaching a net R56.5bn since the beginning of May, according to JSE data. The outflows occurred against the backdrop of a broad sell-off in emerging-market assets sparked by a stronger dollar and rising US rates, which weakened the case for high-yielding investments. They’re a concern because SA depends on portfolio inflo...
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