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When a major credit agency cuts a country’s credit rating to junk status, the assets don’t normally respond by rallying. But it hasn’t been a normal few weeks for South African markets.

Government bonds and the rand might be pulling back again on Monday, but some investors are still counting on a rebound, judging by activity in bond markets.

According to Citi, foreign investors have purchased more than ZAR20bn ($1.4bn) worth of South African government bonds since President Jacob Zuma ordered his finance minister Pravin Gordhan to return from an investor trip last month, ahead of a cabinet reshuffle that saw Mr Gordhan and eight more of the president’s opponents removed.

That includes a net ZAR9.84bn of local government bonds last week, when not one but two rating agencies cut the government’s credit rating.

On Friday, the same day Fitch cut the government’s foreign and local currency ratings to junk status, demand for the country’s benchmark 10-year debt was still high enough to send the yield down 0.055 percentage points. Yields fall when prices rise.

Citi said the flows suggest “a consensus view that these political ructions are temporary, with an expectation that the global hunt for value in emerging markets will lead to a relatively quick snap back”.

Recent evidence suggests a swift rebound isn’t a completely unrealistic prospect. Political worries have knocked South African assets a number of times over the past 18 months, but on each occasion domestic worries have soon been overtaken by broader optimism for emerging markets (see chart above).

Bonds are also likely to have been supported by passive fund flows. Koon Chow, a strategist at UBP, said “I think South Africa is benefiting from a combination of factors including strong inflows to all emerging market bonds of which a portion will still flow to South Africa because it is a large ‘benchmark’ country”.

Cumulative inflows to Vanguard, BlackRock and Van Eck’s emerging market bond ETFs more than doubled to $19bn in 2016, and have increased a further $4bn so far this year.

However, many analysts are sceptical that South African assets will be able to rebound as quickly from the current dip, suggesting that the latest upheaval will have wider consequences.

The last time Mr Zuma sacked a respected finance minister, in December 2015, there was a greater immediate shock to government bonds and the rand. But on that occasion the president quickly moved to calm markets with the appointment of Mr Gordhan; Mr Gordhan’s replacement, however, is a Zuma loyalist, and despite the initial public backlash, the ANC has signaled it will stand by the president.

Citi analyst Adriaan Du Toit wrote:

We are a bit cautious about the idea that the “worst” point has been reached. First, because there seems to be momentum behind the negative ratings trajectory and we think that it is important to bear in mind that adverse ratings actions will trickle down to state owned corporations and that the downgrades could lead to jitters about mandate/index expulsions. Second, because we do not think political power has shifted enough to justify outright bullishness.

Mr Chow said current demand for bonds was based on “rather flimsy arguments”. He said there is still some “‘hope’ that inflation will continue to fall and the hope that the ANC party might soon recall Jacob Zuma as party leader”, but added “hope, as I have often heard, is not a credible strategy”.

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