Institutional Investors Renew Interest in South African Assets as Stagflation Fears Ease

A Bank of America Global Research survey of 14 institutional fund managers conducted from 5-11 June shows a sharp reversal in sentiment toward South African assets. A net 93 % of respondents identified more buying than selling opportunities, the highest proportion recorded since 2009. The same poll notes that exposure to mining equities has risen to its strongest level in five years.

South Africa Finds Buyers Again As Stagflation Fears Cool

The survey attributes the optimism primarily to a 29 % decline in oil prices during June, which has reduced inflationary pressure on the South African economy. Consequently, net inflation expectations fell to 7 %, down from the previous month’s higher reading. The combination of lower energy costs and a resilient trade balance underpins expectations of a stronger rand.

Reuters

• Net buying sentiment: 93 % of fund managers see more buying than selling opportunities.

South Africa Finds Buyers Again As Stagflation Fears Cool

• Oil price movement: 29 % drop in June versus May peaks.

Reuters

• Inflation expectations: 7 % net expectation, down from the prior month.

South Africa Finds Buyers Again As Stagflation Fears Cool

• Mining stock exposure: Highest in five years.

South Africa Finds Buyers Again As Stagflation Fears Cool

• 10-year bond valuation: 29 % of respondents consider South African 10-year bonds undervalued.

South Africa: Investors returning to local assets, according to Bank of America

• Rand forecast: Deutsche Bank projects USD/ZAR ? 16.0 by end-2026.

Reuters

Bank of America Global Research’s survey highlights a “sharp recovery in market sentiment” and notes that all participants anticipate a rate increase by the South African Reserve Bank (SARB) in the third quarter. Deutsche Bank echoes the likelihood of further monetary tightening, citing “pipeline inflation risks” and the possibility of an additional 50 basis-point hike if oil prices rise again. The bank also acknowledges a potential temporary pause at the July Monetary Policy Committee meeting should inflation expectations remain stable. Both institutions point to the SARB’s “hawkish stance on inflation” and domestic political stability as supportive factors for the rand’s projected appreciation.

ReutersSouth Africa: Investors returning to local assets, according to Bank of AmericaSouth Africa Finds Buyers Again As Stagflation Fears Cool

The perception of South African 10-year government bonds as undervalued has renewed interest from fixed-income investors, reinforcing demand for sovereign debt. In the foreign-exchange market, the anticipated strengthening of the rand is linked to the country’s solid trade balance and the SARB’s restrictive monetary policy trajectory.

South Africa: Investors returning to local assets, according to Bank of America

All surveyed fund managers expect the SARB to raise its benchmark interest rate in the third quarter of 2026, though a pause remains possible at the July meeting if inflation expectations hold steady. Deutsche Bank’s longer-term projection of a USD/ZAR rate of 16.0 by the end of 2026 suggests continued confidence in the currency’s resilience, contingent on stable inflation dynamics and sustained trade performance.

Reuters