Nigerian rout continues as Egypt rises above the fray

The Africa economic story remains largely positive with the continent expected to grow at more than 5% in 2015.

However, the projected growth number is not seen as particularly attractive to all, with African Development Bank President Donald Kaberuka saying in January: “Given our demographics, 5% growth is strong but not stellar…it is 7% we must target.”

While economic trends in Africa may indeed be heading in the right direction, regional, structural and political trends will continue to prove challenging for investors.

Of the eleven main indices on the continent, ex South Africa, four were down for the month of January and seven recorded gains, with Nigeria and Egypt the biggest loser and winner respectively.

Nigeria’s All Share Index suffered a 14.7% decline – on the back of a 16.14% loss in 2014. The index has taken a severe beating recently, with its NAV dropping almost 29% in the four months from October to the end of January 2015. The sharp decline in oil prices and the weakening of the naira against the dollar has thrown the Nigerian economy into turmoil, exacerbated by ongoing atrocities committed by the terrorist group Boko Haram. Scheduled elections have meanwhile been postponed from February 14 to March 28.

Despite ongoing political and economic difficulties, Egypt’s EGX 30 started 2015 on a high note with an impressive 10.27% increase in January, adding to its 31.61% gain last year. An exchange-traded fund (ETF) tracking the EGX 30 commenced trading on January 14, the first on the Egyptian exchange.

Ghana’s GSE Composite Index shed 3.85% for the month following a 5.4% gain in 2014. The economy is expected to slow down in 2015, impacted by a deepening power crisis, high inflation (the cedi lost about 27% in 2014), a 9.6% budget deficit and a public-sector wage bill that amounted to 49.3% of tax revenue last year. The national daily minimum wage meanwhile increased by 16.7 % as from January 1, 2015.

The SEMDEX in Mauritius fell 2.62% in January following a 1.05% decline in 2014. Notwithstanding the market’s recent lacklustre performance, Mauritius overtook South Africa last year to become the continent’s most competitive economy and is expected to remain the preferred international financial centre for facilitating investments and trade in Africa.

Morocco’s CFG 25 gained 6.8% in January, reversing a 3.1% decline in December and adding to its 7.54% gain for 2014.

Tunisia’s TUNINDEX increased 2.55%, having gained 16.17% in 2014.

Kenya’s NSE 20 started the year on a positive note with a gain of 1.95% on top of its 3.77% increase last year.

Namibia’s Overall Index gained 1.77% in January, adding to its 10.16% rise in 2014.

Zimbabwe’s Industrials Index was up 1.43% for the month having ended 2014 down 19.46%.

Zambia’s Lusaka All Share was 0.38% in positive territory at the end of January in a month when Edgar Lungu, the leader of Zambia’s ruling Patriotic Front, won the presidential election. Hit by declining copper prices, the kwacha was Africa’s second worst-performing currency last year, down about 15%.

Botswana’s Gaborone Index shed 0.4% in January, its third consecutive monthly loss, having ended last year 4.95% in positive territory. In December Botswana’s parliament passed the BSE transition bill, paving the way for the exchange to be registered as a private company with the government retaining a 51% stake. Copyright. HedgeNews Africa – February 2015.