South African Government Bonds Shine as Global Investors Return

South Africa’s bond market is back in the global spotlight, delivering some of the strongest returns among emerging markets and drawing billions in foreign inflows. 

What’s often seen as a trade for big international funds is also accessible to local investors, who can participate in the same opportunity through EasyEquities, with no minimums required, allowing anyone with a ZAR-based account to gain exposure to government bonds and benefit from the same dynamics that are driving renewed demand from global asset managers.

Foreign Inflows Reach Record Highs

According to Bloomberg, foreign investors are moving heavily into South Africa’s government bond market, lured by one of the best emerging-market trades of recent years. Net inflows in the bond market reached R139 billion ($7.9 billion) in the 18 months through June, more than the prior four years combined, as the coalition government formed after the 2024 elections boosted sentiment with reform pledges and fiscal discipline. 

Despite temporary setbacks like budget disputes and Donald Trump’s tariff threats, appetite for South African bonds has held firm, delivering a 29% dollar return over that period, far above most peers, according to the note. 

High Real Yields Drive Demand

Major asset managers, including Van Eck Associates and LGT Capital Partners, are betting the outperformance will continue. “The full potential of South Africa’s real yields has only begun to emerge,” said Martti Forsberg of LGT. 

With inflation anchored near the Reserve Bank’s target floor and the rand showing unusual stability, the bonds stand out for their high real yields, which remain well above 6% even after benchmark yields dropped to five-year lows. Van Eck’s David Austerweil called the entry point “attractive” and pointed to the central bank’s plans to lower its inflation target as a catalyst for structurally lower yields.

Reforms and Stability Boost Sentiment

The improved economic backdrop has also underpinned demand. The Government of National Unity has begun delivering on reform promises, restructuring Eskom with bailout support, cutting rolling blackouts, and stabilizing public finances. 
Business Leadership South Africa, which tracks reform progress, described the story so far as “good news.” “South Africa is one of the few emerging markets where you see a turnaround in terms of economic prospects,” said Thierry Larose of Vontobel Asset Management. “That’s something that the market appreciated a lot.”

Rand Strength Supports Bonds

A stronger rand has further boosted investor confidence, gaining 7% this year while volatility sits near multi-year lows.  Analysts note that improved electricity supply, coalition stability, and rising infrastructure investment will continue to support the currency. “We maintain our call for a gradual strengthening of the rand against the dollar,” said Matthew Ryan of Ebury Partners, while Larose added that South Africa is increasingly viewed as “a safe beta to play emerging markets” thanks to liquidity and resilience.

Round Up

South Africa’s bonds continue to stand out thanks to high real yields and a more stable rand, and the momentum of government reforms that are beginning to restore investor confidence. 

This asset class offers both access and flexibility: bonds can be bought and sold at any time during trading hours on EasyEquities, allowing investors to respond to interest rate movements or market shifts. Combined with the ability to use bonds as collateral through EasyCredit, this could position government bonds as both a defensive anchor and an active opportunity within a portfolio.