Tag Archives: WEST AFRICA

Major African Stock Index and Exchange Rate Changes in Q2-2014

Advansa International follows exchange rates and stock market indexes for several emerging and frontier markets. Exchange rates and stock indexes are recorded on the last trading day of the week. The tables below show changes from the last trading day of the last full week of the quarter for several key markets in Africa.

Table 1 

 STOCK MARKET INDEX TRACKER 2ND QUARTER 2014

AFRICA

COUNTRY

2ND QUARTER PCT CHANGE

GHANA-Local Currency

-1.42%

GHANA-US$

-18.45%

KENYA-Local Currency

-2.78%

KENYA-US$

-3.86%

NIGERIA-Local Currency

10.06%

NIGERIA-US$

11.33%

SOUTH AFRICA-Local Currency

5.62%

SOUTH AFRICA-US$

5.32%

WEST AFR. BOURSE-Local Currency

-2.17%

WEST AFR. BOURSE-US$

-2.99%

MSCI AFRICA-Local Currency

4.25%

MSCI AFRICA-US$

3.94%

MSCI EMERGING MARKETS-Local Currency

4.44%

MSCI EMERGING MARKETS-US$

6.22%

Sources: Stock exchangewebsites, Financial Times, Advansa International data

 

Table 2

2ND QUARTER 2014 EXCHANGE RATE TRACKER

AFRICA

COUNTRY

2ND QTR PCT CHG 

 

YTD JUN PCT CHANGE 

CFA AREA*

-0.81%

-0.99%

GHANA

-17.03%

-27.12%

KENYA

-1.07%

-1.94%

NIGERIA

1.27%

-1.49%

SOUTH AFRICA

-0.30%

-1.42%

TANZANIA

-1.09%

-4.35%

UGANDA

-1.85%

-3.70%

Sources: Financial Times, Advansa International data

*Includes most French speaking countries such as Benin, Cameroon, Cote D’ivoire, Guinea, Senegal, Togo and others

The big markets–Nigeria and South Africa performed well. Both markets were up in local currency and in dollars.It appears that the long term story–the demographic boom, the growing middle class, the improved political environment in some countries–are causing investors to look past current bumps in the road.

Despite lackluster growth, South African stocks have been strong. The country remains an attractive investment destination, its stock market being the largest and most liquid in Africa.

Nigerian stocks have proven attractive to investors and Boko Haram attacks and new competition from North American shale oil have not changed anyone’s thinking so far. Most of the market activity is in the financial services sector lead by such firms as Access Capital and Guaranty Bank. Consumer goods companies such as Nigerian Brew have also showed strength. The naira actually gained a little during the quarter and remains within the narrow range that has prevailed all year.

In Ghana, currency weakness continues as the nation has sought IMF assistance to help get its accounts back toward balance. Trading activity is as usual dominated by the large consumer and financial service companies such as Fan Milk, UT Bank, and EcoBank. The stock market has weakened, reflecting caution among investors even though the economy is still growing. Could be a chance to get in the market cheap.

In fact, the current period is a possible second chance for international investors to invest in African assets at favorable prices when exchange rates make deals affordable and much of the bad news is already priced in.

 

 

 

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Ghana’s Currency, Millennium Challenge and Economic Prospects

The Millennium Challenge Corp. recently signed a second compact with the Republic of Ghana.http://www.state.gov/secretary/remarks/2014/08/230295.htm  This compact’s focus on the power sector addresses a major challenge to Ghana’s economic growth and to Ghanaians’ overall quality of life. The signing of the MCC compact is a good time to reflect on current economic and business conditions in Ghana.
Ghana is potentially a strong economic engine for the region and Secretary of State Kerry is right to cite Ghana’s commitment to good governance and economic prosperity. However the country faces some major challenges. Among them is the rapid depreciation of Ghana’s currency. Our data shows that the cedi lost about 27% in the 1st half of the year and has continued to fall since then. Currency weakness in Ghana is a symptom of persistent trade deficits as well as rising government spending. The financial community has noticed and has raised the issue in several forums and publications. It doesn’t change the longer term story of Ghana’s growth potential (in fact dollar based investors might find favorable prices for Ghanaian assets) but it does raise questions about how government will handle the problem while remaining investor friendly.
Red flags went up earlier this year when the government began to restrict the movement of currency, damaging Ghana’s reputation for financial openness. The more sensible answer is to change the character of Ghanaian trade. Surpluses might be a lot to ask but Ghana should at least aim for smaller trade deficits. Ramping up the nascent oil sector would help but there should also be greater orientation toward exporting in several sectors. This is why reliable electric power is so crucial. It’s location, general business friendliness and political stability make Ghana a logical export platform for the West Africa region as well as destinations further abroad. However for indigenous and foreign investors to locate in Ghana reliable electric power is essential. For that reason we should all hope for the success of this second MCC compact.

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Major African Stock Index and Exchange Rate Changes in Q1-2014

 

 

 

Advansa International follows exchange rates and stock market indexes for several emerging and frontier markets. Exchange rates and stock indexes are recorded on the last trading day of the week. The tables below show changes from the last trading day of the last full week of the quarter for several key markets in Africa.

Table 1 

 STOCK MARKET INDEX TRACKER 1ST QUARTER 2014

AFRICA

COUNTRY

1ST QUARTER PCT CHANGE

GHANA-Local Currency

11.37%

GHANA-US$

-0.80%

KENYA-Local Currency

1.76%

KENYA-US$

0.88%

NIGERIA-Local Currency

-4.72%

NIGERIA-US$

-7.45%

SOUTH AFRICA-Local Currency

0.48%

SOUTH AFRICA-US$

3.68%

WEST AFR. BOURSE-Local Currency

5.07%

WEST AFR. BOURSE-US$

4.88%

MSCI AFRICA-Local Currency

3.80%

MSCI AFRICA-US$

0.33%

MSCI EMERGING MARKETS-Local Currency

0.79%

MSCI EMERGING MARKETS-US$

-0.23%

Sources: Stock exchangewebsites, Financial Times, Advansa International data

 

Table 2

1ST QUARTER 2014 EXCHANGE RATE TRACKER

AFRICA

COUNTRY

1ST QTR PCT CHG

YTD

MAR PCT CHANGE

CFA AREA*

-0.18%

-0.18%

GHANA

-12.16%

-12.16%

KENYA

-0.88%

-0.88%

NIGERIA

-2.73%

-2.73%

SOUTH AFRICA

-1.12%

-1.12%

TANZANIA

-3.30%

-3.30%

UGANDA

-1.88%

-1.88%

Sources: Financial Times, Advansa International data

*Includes most French speaking countries such as Benin, Cameroon, Cote D’ivoire, Guinea, Senegal, Togo and others

2014 marks a change in investor sentiment towards the emerging and frontier markets. We see a shift from the mad rush into EMs of the past 3-4 years to people wondering if all the emerging market hype is a bit overblown. The announcement of tapering by the US Fed in 2013 was the trigger. In Africa the new outlook is manifest in continued currency weakness and retrenchment in several key stock indexes.

Every currency in our table lost ground in the first quarter. This is in spite of monetary tightening and rising interest rates across the board. Indeed, monetary policy in most of these markets has been fairly rational. On the fiscal side, however governments are finding it difficult to control spending. These are countries with young populations climbing out of poverty. They are at a developmental stage that demands rapid growth and are under tremendous political pressure to deliver social services and better infrastructure, all of which leads to deficits in the trade and fiscal accounts.

Ghana is a conspicuous example among this group. We see from the tables that Ghanaian stocks performed quite well while the currency was the weakest among prominent African economies. Many companies are performing well and investors anticipate future growth so stock prices are rising. However the trade benefits of the nascent oil sector have not materialized and have in fact generated additional imports as production ramps up. Thus the trade balance deteriorates. The resulting inflation on top of politically driven spending increases puts downward pressure on the cedi.

Yet it is these same characteristics that make the emerging markets such as Ghana attractive to investors. Among the larger markets that attract most of the trading volume, the currency issue is not as urgent. If this is a short term correction and if governments and investors don’t panic, then the long term trends will continue to imply growth and favorable investment outcomes.

 

 

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Major African Stock Indexes and Exchange Rate Changes in Q4-2013

Advansa International follows exchange rates and stock market indexes for several emerging and frontier markets. Exchange rates and stock indexes are recorded on the last trading day of the week. The tables below show changes from the last trading day of the last full week of the quarter for several key markets in Africa.

Table 1 

 STOCK MARKET INDEX TRACKER 4TH QUARTER 2013

AFRICA

COUNTRY

4TH QUARTER PCT CHANGE

GHANA-Local Currency

6.07%

GHANA-US$

-1.76%

KENYA-Local Currency

2.49%

KENYA-US$

3.24%

NIGERIA-Local Currency

10.41%

NIGERIA-US$

9.98%

SOUTH AFRICA-Local Currency

3.10%

SOUTH AFRICA-US$

-0.72%

WEST AFR. BOURSE-Local Currency

12.88%

WEST AFR. BOURSE-US$

14.62%

MSCI AFRICA-Local Currency

3.80%

MSCI AFRICA-US$

0.33%

MSCI EMERGING MARKETS-Local Currency

0.79%

MSCI EMERGING MARKETS-US$

-0.23%

Sources: Stock exchangewebsites, Financial Times, Advansa International data

Table 2

4TH QUARTER 2013 EXCHANGE RATE TRACKER

AFRICA

COUNTRY

4TH QTR PCT CHG

YTD

DEC PCT CHANGE

CFA AREA*

1.74%

4.21%

GHANA

-7.82%

-19.39%

KENYA

0.76%

0.12%

NIGERIA

-0.44%

-2.80%

SOUTH AFRICA

-3.82%

-19.08%

TANZANIA

1.83%

-0.19%

UGANDA

2.52%

7.31%

Sources: Financial Times, Advansa International data

*Includes most French speaking countries such as Benin, Cameroon, Cote D’ivoire, Guinea, Senegal, Togo and others

The African story in the fourth quarter was one of strong stock markets but weak currencies. The MSCI Africa index increased by 3.80% in local currency, compared with the MSCI Emerging markets index which was up .79%. However in dollars the Africa index was virtually unchanged at .33%, though still a bit better than the Emerging Markets Index which was down .23%. All the major stock markets were up in local currency. Nigeria was the big winner gaining over 10% (and almost 10% in dollars). Among smaller markets the West Africa Bourse (WAB) gained almost 13%. Because the Euro-linked CFA franc was strong the West Africa Bourse gained almost 15% in dollars. The Ghana Stock Exchange continued its upward march however the cedi continued to weaken wiping out the gains for dollar based investors. Again the financial sector led the way with Ecobank, UT Financial and Cal Bank Ltd. among the volume leaders. The Nigerian and Kenyan markets were also strong, rising 20% and 19% respectively.

The trend is more pronounced when looking at the full year results. All the major stock markets were in weak currency countries except the WAB. The Ghana cedi continues to decline. The economic fundamentals such as rising inflation and current account deficits continue. The Reserve Bank of South Africa continues a loose monetary stance, weakening the rand. In the current market it is wise to recognize the strong performance of individual listed companies, regardless of the macro conditions that impact national economic indicators.

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Major African Stock Indexes and Exchange Rate Changes in Q3-2013

Advansa International follows exchange rates and stock market indexes for several emerging and frontier markets. Exchange rates and stock indexes are recorded on the last trading day of the week. The tables below show changes from the last trading day of the last full week of the quarter for several key markets in Africa.

Table 1 

 STOCK MARKET INDEX TRACKER 3RD QUARTER 2013

AFRICA

COUNTRY

3RD QUARTER PCT CHANGE

GHANA-Local Currency

7.22%

GHANA-US$

0.80%

KENYA-Local Currency

3.66%

KENYA-US$

4.50%

NIGERIA-Local Currency

1.36%

NIGERIA-US$

3.07%

SOUTH AFRICA-Local Currency

12.75%

SOUTH AFRICA-US$

11.26%

WEST AFR. BOURSE-Local Currency

-3.69%

WEST AFR. BOURSE-US$

0.48%

MSCI AFRICA-Local Currency

9.68%

MSCI AFRICA-US$

8.40%

MSCI EMERGING MARKETS-Local Currency

6.26%

MSCI EMERGING MARKETS-US$

6.33%

Sources: Stock exchangewebsites, Financial Times, Advansa International data

Table 2

3RD QUARTER 2013 EXCHANGE RATE TRACKER

AFRICA

COUNTRY

3RD QTR PCT CHG

YTD

SEP PCT CHANGE

CFA AREA*

4.18%

2.42%

GHANA

-6.42%

-12.55%

KENYA

-0.84%

-0.64%

NIGERIA

1.71%

-2.38%

SOUTH AFRICA

-1.49%

-15.86%

TANZANIA

0.74%

-1.98%

UGANDA

1.09%

4.68%

Sources: Financial Times, Advansa International data

*Includes most French speaking countries such as Benin, Cameroon, Cote D’ivoire, Guinea, Senegal, Togo and others

The MSCI Africa index increased by 9.68%% for Q3, compared with the MSCI Emerging markets index which was up 6.26%. Execpt for the West Africa Bourse, all the major stock markets were up this quarter. South African shares picked up after a weak second quarter and gained nearly 13% in local currency in Q3. The Ghana Stock Exchange is on the rise as it has been all year. The strong performance was driven largely by the financial sector with Ecobank, Standard Chartered and Ghana Commercial Bank leading the way. The Nigerian and Kenyan markets were also strong, rising 20% and 19% respectively.

Exchange rates movements in Africa have been relatively small in Q3. The biggest mover was the Ghana cedi which continues to decline, though at a steady and almost predictable rate of about 0.01 cedis per week against the US Dollar. Economic fundamentals have not changed much however the central bank has maintained relatively high interest rates which have kept the currency stable. With the economy growing slowly the Reserve Bank is likely to maintain a looser monetary stance which suggests a weaker rand. The CFA franc strengthened in line with the euro.

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