Zambia’s local currency bond market could extend its world-leading rally if President Hakainde Hichilema secures a decisive victory in the country’s August 13 presidential election, according to Citigroup Inc.
The investment bank said policy continuity following a clear election win would likely strengthen investor confidence, attract fresh foreign inflows and support further gains in Zambia’s sovereign debt market.
Zambia’s kwacha-denominated government bonds have returned 36 percent in US dollar terms so far this year, making them the best-performing emerging market local currency bonds tracked by Bloomberg. By comparison, the Bloomberg Emerging Market Local Currency Government Index has returned just 1.35 percent over the same period.
While the rally has been driven by improving macroeconomic fundamentals and investor-friendly reforms, some investors remain cautious ahead of the election, preferring to wait for the outcome before increasing their exposure.
Citigroup strategist Katie Kironde said a “clear win” for Hichilema would likely encourage offshore
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