European woes and political uncertainties weigh on markets

African bourses were negative in May, with only five of the 11 analysed markets registering gains by month-end. Falling confidence within Euro circles played a significant role in the declining performance of African equities, while political uncertainties in Egypt and corruption in Nigeria placed pressure on the markets.

Leading the pack in May was Kenya’s NSE 20, which gained 2.94%. Zimbabwe’s Industrials Index gained 1.92 % while Botswana’s Gaborone Index added 0.56%. Rounding off the positive territory in May was the Mauritian SEMDEX, which grew by 0.46%.

Egypt’s EGX 30 slipped once again, losing 5.23% in May to bring the year-to-date figure down to a 29.37% gain. The Egyptian market has shed 21.14% since early March, after being more than 50% higher at one point. Namibia’s All Market Index dropped 5.61%, while Ghana’s Composite Index ended the month 3.14% in the red. Zambia’s All Share (-1.64%), Tunisia’s TUNINDEX (-1.09%), Morocco’s Casablanca Index (-0.91%) and Nigeria’s All Share Index (-0.19%) shared a similar fate in May trading.

Despite negative markets, Sub-Saharan Africa’s growth prospects remain sound. According to IMF forecasts, real growth in Sub-Saharan Africa is 5.4% (this revised figure is down 0.5% due to slowing growth in South Africa, Africa’s largest market).

The economic region has expanded at more than 5% over the past eight years. Nigeria, Angola and Tanzania are expected to grow by approximately 7% in 2012, while Sierra Leone and Ivory Coast are set to grow by 14% and 35% respectively, following political turmoil.

Looking to tackle problems facing Africa’s agricultural future, the African Development Bank has advanced US$100 million in investment to Agvance Africa, managed by Credit Suisse, which expects to invest in 12 to 15 best-in-class private-equity funds targeting portfolio companies along the agribusiness value chain across the continent.

Elsewhere in the markets, Canadian-based Hana Mining Ltd dual-listed on the Botswana Stock Exchange (BSE) Venture Capital Board in the final week of May. Set for an initial investment of US$285.5 million, the company is looking to construct a 10,000-tonne open-pit mining and milling operation in one of Africa’s premier copper-silver deposits. Due to a lack of infrastructure over the expansive 2,149-square-km copper belt, a feasibility study has been undertaken to determine the construction of a Trans-Kalahari railway linking Botswana and Namibia’s West Coast port of Walvis Bay.

Nigeria’s market suffered in May after allegations of widespread corruption. According to a Nigerian parliamentary report, the Nigerian National Petroleum Company siphoned off approximately US$6.8 billion between 2009 and 2011. Many of the perpetrators have close links with top government officials, which sparked riots across the country.

With the release of this news, the Nigerian market lost 0.19% in May bringing the year-to-date figure to 6.44%. Copyright. HedgeNews Africa – June 2012.

Market results        
Country Local Index Local Index (May) Local Index (YTD)
Nigeria All Share -0.19% 6.44%
Ghana GSE Composite Index -3.13% 5.56%
Kenya NSE 20 2.03% 13.91%
Egypt EGX 30 -5.23% 29.37%
Botswana Gaborone Index 0.56% 13.91%
Tunisia TUNINDEX -1.09% 6.59%
Morocco CFG 25 0.91% -7.20%
Mauritius SEMDEX 0.46% -4.40%
Zimbabwe Industrials Index 1.91% -9.48%
Zambia All Share -1.64% -7.49%  
Namibia Overall Index -5.61% 2.29%  

Data source: Bloomberg