Serbia's government bonds rose sharply after Vucic's defeat
Analysts consider the victory of the Serbian opposition a short-term positive for the market
The yield of dollar bonds of Serbia with maturity in May 2036 this week decreased by 13 bp and reached a minimum value for the month - 6.42%.
Prices for foreign currency bonds rose on the background of the victory of the “Student List” over the coalition of former President of Serbia Aleksandar Vucic in the early parliamentary elections on October 25, writes Bloomberg.
James Wilson, an emerging markets analyst at ING Bank NV, said the election results mean a short-term positive for markets, as the Student List, which aims to fight corruption and pursue reforms, offers investors a "compelling concept" without revealing too many specific policy details.
In addition to the economic plans, investors will be waiting for additional signals about the direction of foreign policy, as the winning side expressed support for European integration while maintaining relations with major countries. According to S&P Global Ratings, a possible acceleration of the process of joining the European Union will help strengthen the credibility of policy and investor confidence.
The country’s investment rating is supported by large foreign exchange reserves, shrinking debt, a stable financial system and a well-capitalized banking system, S&P Global Ratings recalled, as well as prudent macroeconomic management and favorable growth prospects, the rating agency added.
Mauro Giorgio Marrano, senior economist at UniCredit SpA, suggested that the new administration would put more emphasis on accountability, transparency, the rule of law and anti-corruption measures.
Former Serbian President Aleksandar Vucic acknowledged defeat and called the opposition’s victory a “confirmation of a revolution” that was carried out with the support of “various European countries and the American deep state opposed to [US President Donald] Trump.” He also suggested that the new authorities will impose sanctions against Russia in the spring. Later, the Student List ruled out imposing sanctions against Russia.
