Investments

Demand likely to remain high for inflation linked bonds despite better inflation outlook

Demand for inflation-linked bonds, especially those with longer maturities, tends to be a case of feast of famine. Buyers of long-dated inflation linked paper have very specific requirements and their demand tends to come in spurts. National Treasury’s preponderance with issuing longer-dated inflation linked paper means that inflation-linked bond auctions can either be very well supported or very poorly supported depending on whether investors are in a buying cycle or not. In other words, there were periods when buyers were strongly motivated but equally the auctions were prone to long periods when buyers were absent from the market.

Global economic perspective: July

Economic perspective for July from Franklin Templeton Fixed Income Group: Christopher Molumphy, Michael Materasso, Roger Bayston, John Beck and David Zahn.

China - 2015 private sector debt accounted for 205% of GDP

The good, the bad and the ugly of African Capital Markets

Gross domestic product (“GDP”) growth in sub-Saharan Africa declined from 4.5% in 2014 to an estimated 3% in 2015. This decline is attributed to low commodity prices, particularly oil, rising borrowing costs and other domestic challenges such as power shortages, the Ebola epidemic, conflict and political and security issues. The decline is expected to continue in 2016 with GDP projected to reduce to 2.5%. This on-going decline is due to the issues mentioned above, compounded by tightening global financial conditions and drought in certain parts of the region.