Good Performance of African Markets

Stock

The week is good in the African markets with most of the markets posting strong performances. The Namibian Stock Exchange finished first. 

The NSX gains 7.35%. As South Africa’s major trading partner and as the Namibian dollar leans against the South African rand, which has also surged, the performance of the Namibian Stock Exchange is not really a surprise. Optimism was the order of the day in Southern African markets.

Not surprisingly, Jacob Zuma resigned this week and passed the torch to new President Cyril Ramaphosa who, after taking the oath, addressed Parliament in his first speech on the state of the Nation.

In his speech, Ramaphosa promised to strengthen the South African economy and rebuild investor confidence. His priorities are the reduction of the fiscal deficit, the control of the debt, and the recovery of the public enterprises.

Ramaphosa will be president until the national elections to be held in 2019. The challenge is enormous, but it seems that the new President is perceived as a person capable of the survey. A first short-term catalyst is the presentation of the national budget to Parliament this week. The JSE jumped 5.76%.

In Cairo, the Central Bank lowered its key rates by 100 basis points last week. This is the first decline since the liberalization in 2016 of the Egyptian pound, the national currency.

The overnight deposit rate and the overnight lending rate are now set at 17.75% and 18.75%, respectively. This is not a complete surprise since the indicators pointed to a slowdown in inflation.

The latter reached 17.1% in January and fell for 6 consecutive months. The EGX30 remains relatively stable and gains 0.30%.

Eurobonds are back on the scene as a relatively cheap alternative for financing African states. After Egypt, it is now Nigeria’s turn to issue this week $ 2.5 billion Eurobonds. The idea is to reduce the burden of domestic debt which is more expensive with 2-digit rates on bonds in local currency by turning to international markets.

It is said that other countries such as Angola, Ghana, Ivory Coast, and Kenya are also considering using the Eurobonds route. Nigeria’s National Bureau of Statistics released economic data for January, which indicates that inflation continues to slow. The consumer price index went from 18.72% in January 2017 to 15.13% in January. The NGSE loses 1.13%.

Kenya’s Minister of Finance expects the economy to grow by 5.8 percent this year, recovering from the drought and political uncertainty that weighed on growth in 2017.

The budget deficit is expected to decrease and reach 6% of GDP in the next fiscal year, which will start in July, and 3% by 2022, compared to 8.9% in the last fiscal year ending last June. The NSE gains 0.16%.

African Markets 

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