That\u2019s the biggest weekly outflow on record since at least 2019, when Bloomberg started compiling the data.<\/p>\n\n\n\n
It\u2019s a sharp turnaround from the first two months of the year, when foreign investors were net buyers of R28.6 billion rand of the debt, according to National Treasury data.<\/p>\n\n\n\n
Coming on the heels of large inflows in 2025, which had left positioning ripe for a selloff, according to Deutsche Bank.<\/p>\n\n\n\n
\u201cWe recommend remaining cautious until more clarity on the geopolitical outlook materialises,\u201d strategists, including Christian Wietoska, wrote in a note. The strategists last week shortened duration exposure to South African government bonds.<\/p>\n\n\n\n
South Africa\u2019s 10-year yield plunged by more than 300 basis points since April\u2019s tariff turmoil to a record low in February as investors warmed to the coalition government\u2019s economic program, including an improving fiscal outlook and planned reduction in debt issuance. <\/p>\n\n\n\n
Foreign investors lifted their share of fixed-rate bond holdings to 32% at the end of February, from 30% a year earlier.<\/p>\n\n\n\n
The rally took the bonds into \u201cbubble territory,\u201d according to Asad Bhatti, head of emerging markets at Invesco Asset Management.<\/p>\n\n\n\n
That\u2019s changing as hostilities in the Middle East send oil prices skyrocketing, raising concern that the South African Reserve Bank\u2019s 3% inflation target will be tough to achieve, at least this year.<\/p>\n\n\n\n
Since the outbreak of the conflict, the 10-year yield has soared more than 90 basis points, among the most in emerging markets. The yield dipped 13 basis points on Tuesday to 8.96%.<\/p>\n\n\n\n
Some see a buying opportunity<\/h2>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/11\/JSE-1-1024x576.jpg\")
<\/a><\/figure>\n\n\n\nIn another sign of increasing nervousness, the cost of insuring the country\u2019s debt against default over five years via credit-default swaps climbed to a five-month high.<\/p>\n\n\n\n
\u201cGiven very heavy overweight positioning in SAGBs and many investors sitting on big profits, it made it very easy for investors to sell out of their positions,\u201d said Bhatti, who cut his positions in 2048 securities last week. <\/p>\n\n\n\n
\u201cSouth Africa\u2019s economy is also a net oil importer, which also placed it into the firing line.\u201d<\/p>\n\n\n\n
Some investors see the recent declines as a buying opportunity. A credible central bank, an inflation-targeting regime, as well as fiscal consolidation are among the reasons South Africa is viewed as a \u201cpositive re-rating\u201d emerging market, according to Arif Joshi, a senior portfolio manager at Bramshill Investments.<\/p>\n\n\n\n
Demand at the weekly government bond auction on Tuesday, though lower than last week, remained strong, with primary dealers placing orders for 3.5 times the amount of debt on offer.<\/p>\n\n\n\n
\u201cI\u2019m going the other way, adding South African government bonds into this weakness,\u201d Joshi said, adding that he expects the SARB to intervene in the market by buying bonds to shore up liquidity if the war drags on.<\/p>\n\n\n\n
SARB spokesperson Thoraya Pandy said the central bank couldn\u2019t comment as it is in a blackout period ahead of this month\u2019s policy meeting. SARB Deputy Governor Fundi Tshazibana told Bloomberg News last week that the central bank is monitoring markets and stands ready to act if major dysfunction emerges.<\/p>\n\n\n\n
But investors shouldn\u2019t count on the central bank to rescue them, said Philip Fielding, a fund manager at Fidelity International in London. \u201cIt\u2019s not in their nature to step into the bond market, and so far the flows are orderly.\u201d<\/p>\n\n\n\n
If the war rages for much longer and oil prices stay elevated, the central bank is likely to end its rate-cutting cycle. Markets have swung from pricing in two rate cuts by year-end to pricing a 25-basis-point increase, which will further drag on bonds.<\/p>\n\n\n\n
<\/a><\/figure>\n\n\n\nIn another sign of increasing nervousness, the cost of insuring the country\u2019s debt against default over five years via credit-default swaps climbed to a five-month high.<\/p>\n\n\n\n
\u201cGiven very heavy overweight positioning in SAGBs and many investors sitting on big profits, it made it very easy for investors to sell out of their positions,\u201d said Bhatti, who cut his positions in 2048 securities last week. <\/p>\n\n\n\n
\u201cSouth Africa\u2019s economy is also a net oil importer, which also placed it into the firing line.\u201d<\/p>\n\n\n\n
Some investors see the recent declines as a buying opportunity. A credible central bank, an inflation-targeting regime, as well as fiscal consolidation are among the reasons South Africa is viewed as a \u201cpositive re-rating\u201d emerging market, according to Arif Joshi, a senior portfolio manager at Bramshill Investments.<\/p>\n\n\n\n
Demand at the weekly government bond auction on Tuesday, though lower than last week, remained strong, with primary dealers placing orders for 3.5 times the amount of debt on offer.<\/p>\n\n\n\n
\u201cI\u2019m going the other way, adding South African government bonds into this weakness,\u201d Joshi said, adding that he expects the SARB to intervene in the market by buying bonds to shore up liquidity if the war drags on.<\/p>\n\n\n\n
SARB spokesperson Thoraya Pandy said the central bank couldn\u2019t comment as it is in a blackout period ahead of this month\u2019s policy meeting. SARB Deputy Governor Fundi Tshazibana told Bloomberg News last week that the central bank is monitoring markets and stands ready to act if major dysfunction emerges.<\/p>\n\n\n\n
But investors shouldn\u2019t count on the central bank to rescue them, said Philip Fielding, a fund manager at Fidelity International in London. \u201cIt\u2019s not in their nature to step into the bond market, and so far the flows are orderly.\u201d<\/p>\n\n\n\n
If the war rages for much longer and oil prices stay elevated, the central bank is likely to end its rate-cutting cycle. Markets have swung from pricing in two rate cuts by year-end to pricing a 25-basis-point increase, which will further drag on bonds.<\/p>\n\n\n\n