Investors Stay Bullish on Zambia as Copper Rally Lifts Assets

Zambia's post-election tensions have done little to dampen investor appetite for its stocks, bonds and currency, as a copper rally positions the country as a potential key player in the global artificial intelligence infrastructure build-out.

Some of the world's largest money managers and lenders, including William Blair, Bank of America, AllianceBernstein and Citigroup, are bullish on Zambia, betting on policy continuity after President Hakainde Hichilema's re-election on August 13. Investors have largely looked past the political turbulence, focusing instead on an improving fiscal trajectory and expectations of a fresh deal with the International Monetary Fund.

"The more durable story here will be policy continuity, followed relatively soon by a new IMF anchor arrangement," said Adriaan du Toit of AllianceBernstein.

The kwacha has strengthened 16 percent against the dollar this year, buoyed by copper's 15 percent rally and strong demand for local debt following a successful restructuring. Zambia has set ambitious plans to more than triple copper output, aiming to become a key supplier to the semiconductor and AI sectors.

That optimism is feeding bullish bets across the board. Citigroup has recommended positions favouring further kwacha gains and turned overweight on Zambian credit, while the country's sovereign risk premium over US Treasuries has narrowed. Local-currency debt has returned almost 37 percent this year, the highest in Africa, and Lusaka's equity index climbed more than 2 percent in August.

Analysts say Zambia is increasingly viewed as a "reform story."