This week ended on a bitter note as on top of an already fragile market perception of China came the news of an easing of sanctions against Iran which raised concerns about an increase in oil supplies in a market facing the lowest prices seen in more than a decade. Indeed, home to almost 10% of the world’s proven oil reserves, Iran’s exports could put further pressure on prices and it is that very concern that sent Brent crude to a new 12-year low on Friday helping to spur a global stock rout.
Egyptian equities extended losses after their worst week since the Arab Spring, the EGX30 fell by 15.38%. This was due to a series of negative news which posed pressure on Egyptian equities. First, the World Bank cut its growth forecast to the Egyptian economy from 4.2% to 3.8% for FY16. Then, a monthly survey showed business activity declined during December 2015. Finally, the attacks on a Hurghada hotel did not help. The subsequent panic led to a broad selling wave that saw nearly all EGX30 stocks experience hefty losses. It seems that local institutions were also panicking because of the selloff in Gulf markets following oil’s drop. However, as a net importer of crude, Egypt should benefit from lower oil prices and save on its fuel subsidies. NGSE ASI plunged by 13% as Nigerian equities retreated for a sixth day after Brent crude posted another decline. Nigeria is Africa’s largest oil producer. This leads to more and more pressure to devalue the naira as the currency remains weak because of low oil price in the international market. Among other negative performances, one notes DSE ASI which declined by 4.73%, USE ASI decreasing by 3.16%, JSE ASI by 2.38% with the South African rand continuing its weakening , NSE ASI by 2.33% and ZSE Ind. 2.03%.
On the brighter side, despite the unfavourable global trends TUNINDEX is starting the year like a star as it rose 2.62%, LuSE ASI increased by 0.72% and SEMDEX increased by 0.70% while the others remained broadly flat.
