(Bloomberg) -- Foreign investors bought the most South African government bonds in more than two years on Thursday, attracted by yields among the highest in emerging markets as the Federal Reserve gets closer to cutting interest rates.
Non-residents bought a net 4.6 billion rand ($256 million) of the securities, the most in a day since January 2022, according to JSE Ltd. data compiled by Bloomberg.
That capped eight days of net buying by foreigners, the longest streak in more than seven years.
Investors are showing renewed interest in South Africa’s bonds after the May 29 election, when the African National Congress lost its parliamentary majority. That forced it to invite opposition parties into government, including the business-friendly Democratic Alliance, which drew the second-most votes.
Investors are wagering that the presence of opposition parties may help the new administration tackle state ineptitude, power shortages and logistics snarl-ups that have hobbled economic growth. The rand is the best-performing developing currency since the election, while South African stocks are at record highs.
Yields on benchmark 2035 bonds have dropped 130 basis points since the end of May to around 10.95%, but remain among the highest in major emerging markets. The debt has returned 11% in dollar terms since the vote, by far the best performance in a Bloomberg index of emerging-market local-government debt.
The data on non-resident sales and purchases capture all transactions, including those that are not settled, such as repo trades. But data on settled trades paint a similar picture, with more than 12 billion rand of inflows since May 29.
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