Weekly Market Commentary - March 4, 2016

They say, no matter how long the winter, spring is sure to follow. The question is how long will winter last this year? Globally as the week went on, U.S. economic data and a rally in a range of commodities moderated risk appetites, while traders were cautiously waiting for U.S. unemployment numbers. A series of economic reports seems to suggest that the US economy is not doing as badly as the market originally thought…On Friday, the Labour Department announced that the U.S. generated 242,000 new jobs in February, beating economists’ expectations of 198,000 new jobs. This is a likely negative read-across for African markets as this growth reinforces the case for the Federal Reserve to further push its tightening policy, which traditionally has prompted an outflow of investments from emerging markets. Well, despite everything, green was the dress code this week on African markets.
 
The JSE ASI increased by 5.61% this week. Barclays Plc announced on Tuesday that it would reduce its 62 percent stake in Barclays Africa Group Ltd. over the next two to three years. After some fear on the market, sentiment strengthened when Barclays highlighted that the move was due to increasing capital requirements with respect to its investment in Barclay Africa and not because of a lack of confidence in the country or the rest of the continent.  Barclays’ move comes as South Africa hovers near recession and is under threat of a credit-rating downgrade to junk. Barclays’ African business has also been hit by lower commodity prices. Fitch reacted Friday downgrading the African unit's foreign currency and local currency long-term issuer default ratios to BBB-, from BBB and BBB+ respectively, saying it sees a limited probability of support from Barclays in the transition phase up to the point of sale.
In other news, South Africa-based MTN's share price made its biggest daily gain in seven years on Thursday after the Company announced it had provisioned $600 million to settle its dispute with Nigeria over a $3.9 billion fine. The amount set aside implies a smaller fine than people had anticipated. MTN also announced a surprise 5.2% increase in its dividend, even though its profits more than halved in what the company described as a "challenging year". The market had expected them to cut it by 50% at least.
 
NGSE ASI rose by 6.57% this week. According to Nigeria's petroleum minister, some members of OPEC plan to meet other oil producers in Russia around March 20 for new talks on an oil output freeze. The plunge in oil revenue has hit the country’s public finances and currency. The Minister also stated that getting a price of $50 would be celebrated by all as that is a target that they have.
 
In Egypt, the EGX 30 went down slightly compared to last week on the lack of any momentum that triggers it higher on the short run. The initial public offering of Egypt's dairy firm Domty on Sunday is expected to attract liquidity from the second market. Domty will float 49% of its capital in two tranches for institutions and retail investors.
 
NSE ASI rose 4.06% as KCB, Kenya’s largest bank by assets, reported a 16.4% increase in its profits on Tuesday. This despite booking a KES 6.1bn foreign exchange loss, mainly from its South Sudan operations where the national currency has been devalued by more than 100% since December.