The developments of the Fixed Income market over
the past 10 years as well as developments currently
in progress
By
Michele Iacovitti
University of Johannesburg
Department of Finance and Investment Management
University of Johannesburg
Auckland Park
Johannesburg, Gauteng
Republic of South Africa
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Abstract
It is well known that the bond market an essential part of the financial market. This
article is exploring what developments have occurred in the past 10 years as well as
current development in progress for the fixed income markets, with focus on
emerging markets which we can compare to South Africa, corporate bonds and new
technologies to determine what investors can expect from the future fixed income
market in South Africa as well as globally. In order to do so this article discussed
importance of macroeconomic and microeconomic factors in bond markets as well
as why fixed income markets has more importance for emerging economies then
developed economies. There are limitations and the assumptions that are related to
this study.
Keywords
Fixed Income, E-Bond, Global Bond Markets, Developed Markets, Emerging
Markets, Bonds, Macroeconomics, Microeconomics
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Introduction and background
Without a fixed income market there would be little opportunity for companies to
grow as the fixed income market is a source of capital being bonds bills notes etc.
This capital is used for numerous things such as infrastructure start-up companies or
mature companies looking to expand. Without this market it would in turn affect the
growth of an entire economy, one could say that the fixed income market is the core
of an economy. A bond market has significant importance in any economy but more
so in emerging economies where saving and investment opportunities are limited
(Khalid & Rajaguru 2010).
In South Africa specifically the JSE (Johannesburg Stock Exchange) regulates the
largest listed fixed income market in Africa. It has achieved this since 2009 which
can be linked to the improvements in the banking sector as well as an enhanced
regulated sector. The JSE which includes over R1 trillion in listed government bonds,
this accounts for 90% of all its liquidity. South Africa Bond market has seen steady
