September continued on a downhill slide as nine of Africa’s major bourses slid further into the red, with markets continuing to bleed on the macro-economic periphery as investors seek shelter from European woes.
Egypt’s EGX 30 suffered the greatest losses, dipping 10.83% through the month, while Nigeria’s All Share was down 5.23% with Kenya’s NSE 20 not far behind at -5.2%. Namibia’s All Share shed 4.94% while Ghana’s Composite lost 4.08%. The Zimbabwe Industrials Index (-2.93%), the Mauritian SEMDEX (-2.55%), Botswana’s Gaborone Index (-2.11%) and Zambia’s All Share (-1.51%) all suffered a similar fate.
Evading the trend to post positive returns for the fourth consecutive month, the Tunisian TUNINDEX returned a solid 3.69%. Morocco was the only other market to move into the black, with the CFG 25 adding 0.07% in September.
The implications of political tensions and reform continue to shape the Egyptian market, which is cautious ahead of parliamentary elections forecast for November 28. Market activity was suspended on September 29 after the EGX 30 Index lost 5%. The drawdown abated on news that election rules and regulations had been altered to accommodate democratic demands. The market remains the worst performing globally so far this year, with a decline of 42.07%.
Egyptian fundamentals appear relatively firm as inflation moderated to 8.5% in August from 10.4% in July, with real GDP growth at 1.8% for the financial year to June 2011.
The Nigerian market is now down 17.75% on a year-to-date basis with market capitalisation reduced by NGN 1.309 trillion (approx $8.1 billion) to NGN 6.603 trillion (approx $41.4 billion). Liquidity has also raised concern as market volume has fallen significantly over the past nine months. Investors continue to lack confidence after the 2008/9 crash, and with no significant rebound since the 2009 low, they remain critical of the banking crisis.
Approximately 70% of investors in Nigeria are foreigners with primary market activity dormant. Nigeria has released details on the proposed privatisation of its energy sector, most notably electricity generation and distribution, and initiatives to improve policy are under way as a means to re-establish market confidence.
Kenya continues to drift downward amid negative sentiment and weakening fundamentals. September registered a 5.2% drop in the NSE 20, contributing to a year-to-date figure of -25.91%. Inflation rose to 17.7% in September as the currency depreciates, with interest rates forecast to rise as inflationary pressures build.
The potential discovery of oil and natural gas within Kenya’s borders continues to create interest. Oil exploration has heated up since September with numerous companies hoping to strike oil by the end of 2011.
Tanzania’s DSE index has excelled on a year-to-date basis, gaining 10.5% while neighbours Uganda and Kenya register losses. The resource craze appears to be benefitting East Africa as iron ore and the recently discovered natural gas reserves in Tanzania attract international interest.
Ghana’s Composite dropped 4.08% during September, mostly due to weakness in the banking sector. Both UT Bank and Ecobank Ghana fell by more than 10%.
Tunisia’s TUNINDEX gained 3.69%, its fourth consecutive positive month. Banks struggled yet again in September while transport company Tunisair soared towards month-end, showing signs of a tourism revival.
Rwanda’s equity exchange jumped in September as the Bank of Kigali IPO raised market cap by approximately 52% on its first day of trading. The bank plans to use the proceeds to expand the number of branches by 44 and establish itself as a leading entity in the financial sector.
|Country||Local Index||Local Index return (Sep)||Local Index (YTD)|
|Ghana||GSE Composite Index||-4.08%||10.7%|
|Namibia||Local Companies Index||-4.94%||-12.27%|