JOHANNESBURG - A surprise economic recession has brought a sharp focus on South Africa’s shrinking revenue and mounting debt pile and could intensify a bond sell-off at a time the assets are reeling from nervousness over Turkey’s economic woes.

The bonds had in July bounced back from a record sell-off in June, as investors opted to pick up the high return on offer.

Investors have dumped South African bonds since August as an emerging markets sell-off picked up pace driven by concerns over the Turkish central bank’s ability to rein in double-digit inflation, which has surged to nearly 18 percent.

But news that Africa’s most industrialised economy had entered a recession sent the currency and bonds tumbling, wiping away the optimism that followed the entry in February of President Cyril Ramaphosa and Finance Minister Nhlanhla Nene.





South Africa’s slide into recession for the first time since 2009 is a blow to Ramaphosa, who has talked up his plans of an economical revival after nine years of stagnation under former president Jacob Zuma.





The rand fell 5 percent and yields on local currency and foreign bonds soared in response to news of the recession.





“All things being equal bonds yielding above 9 percent should be attractive, but we’re really concerned about the impact of the GDP data on the deficits,” said Ruen Naidu, head of multi assets at Argon Assets.





The recession could also draw the attention of ratings agencies, who have South Africa’s sovereign ratings near “junk” status.



