Frontier Market Reforms and Rate Hikes Boost Investor Sentiment
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Frontier markets like Kenya, Nigeria, and Egypt have hiked rates and taken steps to stabilize currencies and curb inflation. This signals greater policy stability.
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Investors are positioning in frontier market bonds due to falling yields and strengthening currencies. Ex-ante real rates in these markets have turned positive.
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Nigeria and Egypt have attracted demand after policy measures like rate hikes and currency reforms. Their bonds and currencies now look more attractive.
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Kenya has rebounded due to tighter policy, IMF funding, and a Eurobond issue. Its shilling has recovered over 20% versus the dollar this year.
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Banks like Barclays and Deutsche are bullish on bonds from Nigeria, Egypt, and other frontier markets thanks to reforms, value, and yield pickup.