Headwinds buffet African bourses

July was another tough month for emerging markets with most African bourses taking strain. With US interest rates expected to rise for the first time in eight years, the dollar has been strengthening against domestic currencies across the continent.

Of the 11 Africa indices we report on, ex South Africa, only three were in positive territory for the month, and only three – in Botswana, Tunisia and Morocco – were in positive territory year to date. July was a particularly cruel month for investors in Kenya and Nigeria where indices suffered significant losses.

In the month that US president Obama visited Kenya, the NSE 20 plunged -10.22%, dragging its year-to-date losses down to -13.85%, or -19.30% in US dollar terms. On July 7, Kenya’s central bank announced a surprise 150 basis point interest-rate hike, to 11.50%, on the back of a 150 basis point increase in June. The strong US dollar and large current account deficit have exerted downward pressure on the Kenyan shilling, which has weakened by approximately 10% against the dollar since January.

Nigeria’s All Share Index also faced strong headwinds in July, plunging -9.79% to take its YTD loss to -12.92%, or -19.33% in US dollar terms.

Ghana’s GSE Composite Index tumbled -6.54%, pushing it -2.77% into negative territory for the year.

Egypt’s EGX 30 shed, -2.15% taking its YTD losses to -8.23%, or -16.13% in US dollar terms.

Zimbabwe’s ZSE Industrial Index weakened -1.87% ending the month -10.54% in the red YTD.

Tunisia’s TUNINDEX gave back -1.84%, leaving it 10.29% in positive territory for 2015, a YTD gain of 4.02% in US dollar terms, making it the second-best performer of the basket of indices we report on.

Namibia’s Overall Index lost -0.98% in July to end the month -1.01% down YTD.

The SEMDEX in Mauritius slipped -0.40% to sit at -4.85% YTD, or down -14.83% in US dollar terms.

Botswana’s Gaborone Index has been the best performer of the year so far and also posted the highest increase in July, climbing 2.30% to take its YTD gains to 15.10%, or an 8.23% return in US dollar terms.

Morocco’s CFG 25 added 2.23% and was up 2.07% YTD.

The Lusaka All Share gained 0.09% in July and was -5.09% down for the year so far, or -20.67% in US dollar terms. Copyright. HedgeNews Africa – August 2015.