African Stock Market March 2016: Bull rules, Egyptian equities rewards local investors with 22.4% gains

LAGOS, Nigeria, Capital Markets in Africa — The Federal Reserve’s dovish stance on U.S. interest rates and a rebound in commodity prices fuelled an African-market rally in March, leading currencies to record monthly gains against the dollar. African equity market performance measured by country equity benchmark index returns ended in positive for the month, with eleven gainers and seven losers on the local currency basis. March’s average return of 2.3 percent was recorded across eighteen African stock indices. In addition, among the eighteen equity market Tanzania equity market (measured by DSE All Share index) was the worst performer after losing 8.6 percent to end at 2172.97 points.

Looking at the green zone, Egyptian Exchanges (measured by EGX30 Index) topped the positive table by adding 22.4 percent or 1378.06 points to end at 7524.99 points.  The equity market capitalization added EGP 14.4 billion (about US$1.62 million) to close at EGP 407. 481 billion relative to the end of February trading sessions’ market capitalization of EGP 393.098 billion. This positive return was as a result of strong earnings reported by corporates in the banking and real-estate as well as central bank’s devaluation of Egyptian pound against the US dollar and promise to move to a more flexible exchange regime.

South Africa’s Johannesburg All-Share was the third best performer by gaining 5.7 percent to settled at 52,250.28 points. The equity market capitalization ended at ZAR 10.98 trillion after adding KES 533 billion (c.US$36.31 billion) from the market capitalization of ZAR 10.47 trillion recorded at the end of previous month trading session.

Kenya’s Nairobi Securities Exchange All-Share occupied the fifth position gaining 3.8 percent to settled at 147.44 points. The equity market capitalization ended at KES 2,084 from the market capitalization of KES 2,008 billion recorded in January. While Nigeria equities market closed at 25,306.22 levels after adding 3.0 percent and the market capitalization ended at NGN 8.8 trillion having gained NGN 240 billion (US$1.2 billion) relative to end of February’s market capitalization of NGN 8.5 billion.

Looking it from the quarterly return basis for local investor, African equity performance ended on neutral market sentiment, with 9 gainers and 9 losers for the first quarter (Q1) against positive market sensitive recorded at fourth quarter (Q4, 2015). Namibia stock exchange was the top performer, by adding 14.6 percent in Q1 against 13.1% in March while Zimbabwe stock markets was crowned the biggest loser in Q1, by shredding off 15.0 percent to settle at 97.61 points.

From the foreign investor viewpoint, African equity rewarded them with an average of 4.4 percent (on a 1 month return basis) and 0.5 percent in Q1. This is attributed to stability most of the African currencies against the US Dollar in March, for instance South African rand and Malawian Kwacha have appreciated by 7.11 percent and 8.02 percent respectively against the US Dollar. The FTSE ASEA Pan Africa Index and the S&P All Africa Index both grew by 3.4 (but lost 3.1 percent in Q1) percent and 11.7 percent (gained 7.1 percent in Q1) respectively in March. The MSCI African Markets Index to a 15.6 percent advance, the most since May 2009.

In comparison with other equity markets, African equity market over performed against major developed and emerging equity markets.  For instance, the S&P 500 index (+6.60 in March and +0.77 percent in Q1), the UK FTSE 100 index (+4.50 percent and -3.60 percent in March and Q1 respectively) and Hong Kong index (-13.27 percent in March and -5.27 percent in Q1). However, it underperformed the Brazilian equity markets which recorded 26.43 year-to-date return on dollar basis.

The best performing market year-to-date for foreign investors was the Namibian equity market with a year-to-date return of 20.9 percent (measured by FTSE/Namibia Overall return) out of which about 6.2 percent is due to the strengthening of Namibian dollar kwacha against the US dollar.  This is followed by the BRVM and Tunisia equity markets recording year to date returns of 9.6 percent (measured by the BRVM Composite Index) and 8.8 percent (measured as the Tunis All Share Index) respectively.

Note:
The S&P All Africa index is a comprehensive benchmark for the African market, covering companies listed in 13 countries: Botswana, Côte d’Ivoire, Egypt, Ghana, Kenya, Mauritius, Morocco, Namibia, Nigeria, South Africa, Tunisia, Zambia and Zimbabwe plus companies listed in developed markets that derive the majority of their revenue from the African continent.

• The FTSE ASEA Pan Africa Index Series represents the performance of eligible securities listed on ASEA (African Securities Exchanges Association) member exchanges. It is a free float market capitalisation weighted index series constructed from securities domiciled in the almost eighteen countries.
• BRVM Bourse is the regional stock exchange for eight West Africa countries: Benin, Burkina Faso, Guinea-Bissau, Cote d’Ivoire, Mali, Niger, Senegal and Togo.