LUSAKA, July 22 – Zambia’s local currency bond market could extend its strong performance if President Hakainde Hichilema wins a second term in the country’s August 13 presidential election, according to Citigroup Inc.
The investment bank said policy continuity following a decisive election victory would likely reinforce investor confidence and support further gains in Zambia’s sovereign debt market.
Zambia’s kwacha-denominated government bonds have delivered a 36% return in US dollar terms so far this year, making them the best-performing emerging market local currency bonds according by Bloomberg.
The performance stands in sharp contrast to the broader Bloomberg Emerging Market Local Currency Government Index, which has returned just 1.35% over the same period.
Despite the strong rally, some investors remain cautious ahead of next month’s election, with political uncertainty prompting market participants to await the outcome before increasing their exposure.
A convincing re-election victory for Hichilema is widely viewed as likely to reinforce confidence in Zambia’s ongoing fiscal reforms and economic recovery following the country’s emergence from sovereign default and subsequent debt restructuring efforts.
The election outcome is expected to be closely monitored by both domestic and international investors as they assess the country’s policy direction and the sustainability of recent improvements in macroeconomic stability.
