Stocks of companies in developing countries such as South Africa are being snapped up by savvy investors.
US treasuries rose alongside Japanese and Australian bonds after the World Bank pared its projections for economic expansion in 2013 to 2.2% from a January estimate of 2.4%. Foreign investors were net buyers of South African bonds yesterday after four straight days of outflows.
“The sell-off in emerging-market debt has eased,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “This is very apparent in our market, where Tuesday’s drop-back in yields across the curve has been sustained.”
South Africa’s currency gained 1.4% to 9.9751 per dollar as of 11:40 am in Johannesburg on Thursday. Yields on benchmark 10.5% bonds due December 2026 fell three basis points, or 0.03 percentage point, to 7.92%, after dropping 32 basis points in the previous two days.
Foreign investors bought a net R1.95-billion ($194-million) of South African bonds on Wednesday, resulting in net inflows this month of R291-million after outflows of R4.71-billion in May, according to JSE data.
South Africa’s benchmark stock index dropped 1% to the lowest level since May 3. – Bloomberg