South African Bonds Generate Some of the Best Returns in Emerging Markets
- Post-budget relief rally sees debt outperforming peers
- Seasonal demand, reinvested redemptions to drive further gains
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After months of under-performance, South Africa’s local-currency bonds are generating some of the highest returns among emerging-market nations in a relief rally that’s set to continue into year-end.
Yields on government securities reached a post-pandemic high in September, making them the worst performers in emerging markets at the time after Turkey, amid a relentless selloff fueled by concerns about a burgeoning budget deficit. Since then, they’ve earned 6.8% in dollar terms, more than four times the 1.6% average return of developing markets tracked by Bloomberg, and bettered in the period only by Hungary and Colombia.