6 months into the year and African markets performance looks like the World Cup performance i.e. yesterday’s greats are not always tomorrow’s greatest. Top 3 best performers year-to-date: Malawi, Tunisia and Ghana.
South Africa’s currency trajectory is making the market pricing in an interest rate hike this year. The rand has plunged by close to 9% against the dollar year to date, hurt by global risk-off sentiment and poor domestic economic data. However, policymakers have openly stated that they would not act on currency moves until they see a lasting effect on domestic inflation. South Africa’s consumer price inflation lowered to 4.4% in May as the rise in food prices decelerated. Inflation is expected to reach 5.1% in 4Q18 and hence remain in the 3-6% bracket target from the central bank. Hence we may have to wait for inflation to breach the target for a sustainable period before we see any reaction from the central bank. In parallel, Moody’s latest report outlines risk to South Africa’s growth coming from the proposed land and mining reforms. Although the agency expects 1.6% GDP growth in 2018, it states that persistent weak business confidence remains a threat to growth. The JSE is up 1.33%.
News in Zambia report that the country could consider private investments in state-owned firms. Among the firms are: power utility Zesco, Zamtel, Zambia Railways and newspaper companies, Times of Zambia and Zambia Daily Mail. Listing of these companies on the stock exchange is seen as the preferred way to raise capital. The LuSE lost 0.18%.
Ghana Statistic bureau reported that Ghana’s economy grew 6.8% year-on-year in the first three months of 2018 versus 6.7% in the same period last year. Non-oil growth for the first three months reached 5.4% year-on-year compared to 4% last year. Services grew the most at 60.6%, followed by industry at 27.5% and agriculture at 11.9%. The GSE lost 1.36%.
Nigeria plans to raise $2.8 bn of debt offshore as part of its 2018 budget. As a reminder, President Buhari signed a record 9.12 trillion naira budget into law last week to promote growth in the country. The NGSE added 0.09%.
The Egyptian central bank reported that the country’s current deficit contracted $5.3 bn in the first nine months of the 2017/18 fiscal year starting in June from a deficit of $12.5 bn over the same period last year. This is mainly the result of tourism revenues improvement. The EGX30 added 0.02%.
