Eurobonds Jump, Kwacha Strengthens

The markets have responded positively to the election of incoming President Hakainde Hichilema and the news that Zambia will see a peaceful transition of power following last week’s landmark elections.  

Following the declaration of Mr Hichilema’s victory Zambia’s Eurobonds rallied and the kwacha strengthened. The $1 billion of Eurobonds due in 2024 jumped by 11% to 74.14 cents, while the kwacha strengthened by the biggest amount since November 2015, according to Bloomberg. 

The positive trends appear to reflect the confidence of the markets that the incoming president will be able to turnaround the economy. The substantial margin by which Mr Hichilema won the election is also seen as likely to boost stability, with the UPND Alliance enjoying a strong mandate for change. 

As Bloomberg have reported the challenges facing the incoming President include securing a deal with the International Monetary Fund for a bailout after years of talks with the outgoing administration and repairing relations with copper miners so that Zambians can benefit from high prices.  

In his first address to the nation since becoming President Elect Mr Hichilema spoke about the importance of turning the economy around and noted that he would share more specifics on his plan for doing so around this time of inauguration. He also stressed the importance of seeking amicable solutions and ensuring mutual benefit. Mr Hichilema has a degree in economics and is well respected for his business acumen.