South Africa’s bonds are attracting strong foreign inflows, offering some of the highest real yields and returns in emerging markets.
According to Bloomberg, government bonds drew 139 billion rand ($7.9B) in net inflows over 18 months through June — more than the previous four years combined. In dollar terms, local bonds returned 29%, second only to Argentina among EM peers.
Why it matters
1. High real yields supported by low inflation and a stable rand.
2. Foreign ownership has stabilized at 24.7%, ending years of decline.
3. Confidence boosted by the coalition government’s reform agenda after the 2024 elections.
Despite volatility from budget disputes and trade threats, investors remain bullish. Fund managers like Van Eck and LGT Capital Partners highlight South Africa’s unique mix of anchored inflation and currency stability.
“The full potential of South Africa’s real yields has only begun to emerge,” said Martti Forsberg of LGT Capital Partners.
Already in H2 2025, South African bonds have returned 4.4% in dollar terms, compared to a 0.2% average loss for peers — reinforcing their spot as one of the most lucrative EM trades.
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