Some positive signs for growth in new year

African stock markets ended 2011 firmly on the back foot as political revolution and natural disasters contributed significantly to the negative performance of many African countries, compounded by the ongoing European debt crisis which is affecting investors around the world.

Many nations bucked the global trend by achieving rates of growth exceeding 6% in real terms. Namibia, Tanzania, and potentially, Kenya turned the tide by striking oil and in some cases, natural gas. With oil production coming online in late 2010, Ghana became the fastest growing economy worldwide with forecasts reaching 23%. Prospects of increased political stability also appear positive with peaceful elections passing in both Egypt and Tunisia.

During the year, a number of African stock markets upgraded from open outcry methods to live trading computer-based systems. The slow move towards derivative-based exchanges has taken hold in numerous countries, most notably Kenya.

Many African markets were steady in December, however Zambia’s All Share (10.83%) and Egypt’s EGX 30 (-9.89%) were marked by substantial movements. As the top performing market in 2011 and representing one of only two markets in the black for the year, Zambia’s All Share mustered a strong 26.21% gain on a year-to-date basis. Botswana’s Gaborone Index registered an 8.7% rise during the year, with reliable performances throughout 2011.

Egypt’s EGX suffered a 49.28% drop since trade commenced in January 2011. Political revolution rocked the nation sending frenzied investors to withdraw funds once the exchange reopened. Continued conflict along with international pessimism surrounding European woes has robbed the index of intermittent gains made since then.

Kenya struggled through 2011 as drought brought the country to its knees. The northern and agricultural intense region suffered its worst drought in more than 55 years, placing pressure on inflation, growth, investor confidence, besides the humanitarian distress.  The All Share Index declined 27.69% by year-end.

Although Nigeria posted strong fundamentals throughout 2011, it showed few signs of attaining the gains hoped for by market players. The All Share Index declined 16.31% in 2011, with December bringing a gain of 3.64%.
Morocco’s CFG 25 Index fell 13.41% during the year while Tunisia’s TUNINEDEX, although down 7.63% by year-end, managed to recoup much of the losses caused by the political conflict that engulfed the nation in early 2011. Tunisian returns have been steady since peace was restored.

Ghana’s GSE Composite delivered the continent’s strongest gains in the first half until profit taking took hold. The index ended the year 2.34% in the red as foreign investors retracted from risk.

Rwanda’s market capitalisation expanded approximately 53% after Tullow Oil listed in mid 2011. The small Dar es Salaam market of Tanzania added three new listings, with the benefit of increased liquidity and trading activity. The Zimbabwean Stock Exchange (ZSE) has recently had its operations licence discontinued after failing to comply with regulatory requirements. The exchange remains operational, however trading activity is low as only three brokerages have attained operating licences for 2012 after fulfilling  capital requirements. Copyright HedgeNews Africa – January 2012

Market results        
Country Local Index Local Index (YTD) Local Index (Dec)
Nigeria All Share -16.31% 3.64%
Ghana GSE Composite Index -2.34% -1.84%
Kenya NSE 20 -27.69% 1.57%
Egypt EGX 30 -49.28% -9.87%
Botswana Gaborone Index 8.7% 0.17%
Tunisia TUNINDEX -7.63% 0.85%
Morocco CFG 25 -13.41 0.27%
Mauritius SEMDEX -4.02% 1.31%
Zimbabwe Industrials Index -3.58% 0.61%
Zambia All Share 26.21% 10.83%  
Namibia Local Companies Index -3.34% -0.19%  

Data source: Bloomberg