Standard Chartered Bank’s Global Focus for July 2010, a monthly analysis of economic and financial market developments has predicted that Zambia will benefit from flush global liquidity in the second half of 2010.
It says in Africa, disinflation and accommodative monetary policy have benefited local bonds markets, and that in this space, Ghana, South Africa and Zambia should benefit from flush liquidity.
It reveals that most African local bond markets have enjoyed robust so far in 2010, underpinned by accommodative monetary policy, subdued inflation in markets such as Ghana and Zambia, flush global liquidity, which has spurred a hunt for yield pick-up.
The Global Focus monthly publication however, says that while these market structural prospects remain extremely bright, the cyclical outlook is turning more mixed.
It maintains a positive view on markets such as Ghana and Keneya, where there is a scope for monetary policy to remain accommodative for some time and bond prices appear attractive.
It further reveals that prospects for South Africa and Zambia are more finely balanced, and also depend significantly on global risk appetite.
It also states that with short-end yields still low and most yield curves remaining steep notably in Zambia, general curve flattening is likely in the second half of 2010.
QFM
Attractive bond prices on the local market should boost business growth. The major problem that we have with businesses in Zambia is that very little is known of finance injectors. Banks will give this type of analysis without really sensitising business houses on how they can access bonds and what type of bond they should go for. From what Stanchart are saying these bonds are infation bonds. The principal and interest payments are indexed to inflation. This can be okay where we enjoy low inflation rates for a long time as repayments will be low in line with inflation. The bottom line is educate start-up businesses on bond finance.
Well said Mavimba