Politics home and after haven’t deterred investors from South Africa

By Colleen Goko

Investors have flocked to South Africa’s domestic bond markets, betting the country can stay the course on reforms despite political fractures, but tariff threats and the prospect of a global growth slowdown are casting a long shadow.

Africa’s most industrialized nation depends on foreign investor support to manage its debt load and to keep borrowing costs in check as it faces persistent structural challenges, including unreliable electricity and governance issues that have weighed on its assets in the past.

“We view recent developments in the U.S. trade policies as a material risk to the growth and inflation outlook,” said Thierry Larose, portfolio manager at Vontobel Asset Management, which holds domestic government bonds.

“We see the weaker U.S. dollar as the only meaningful tailwind for local assets.”

Investor interest in domestic bonds has held up well so far. Treasury data shows non-resident holdings of local-currency bonds rose January through