African stock markets on rebound

African stock markets have been on a rebound over the past two months boosted by a return of foreign capital inflows especially from Europe.
The markets were among the worst hit by the easing of the US Federal Reserve’s stimulus programme but the capital outflows are reversing after the European Union instituted measures of its own to stimulate growth.

“Historically, monetary easing measures have seen investors repatriate their investments into emerging and frontiers markets. We expect this to be the case as the eurozone rolls out its easing policy,” said Genghis Capital in their May macro-economic update.

However, there are still long-term risks as the US bond buying cut-back is likely to improve interest rates.

Latest data from Africa Alliance shows that out of the top 18 African stocks markets, 15 have recorded positive index movement since the turn of the year. The Nigeria All Share Index (down 0,2 per-cent), Mauritius Semdex Index (down 0,7 percent) and Zimbabwe’s Industrial Index (down 10 percent) are the only ones to record declines in the six months to June.

Kenya’s NSE All-Share Index has gained 10 percent since the beginning of the year holding on to the second spot behind Egypt’s EGX100 — which is up 12,8 percent — and ahead of other second tier peer bourses of Nigeria, Morocco, Tunisia and Zimbabwe.

“There has been a good rebound and this speaks to outstanding demand for blue chip sub-Sahara African equities and bonds and this was evidenced in the four times over-subscription of our Eurobond,” said Rich Management CEO Aly- Khan Satchu.

South Africa’s Johannesburg Stock Exchange, the only first tier market on the continent, has a year-to-date gain of 9,4 percent, accelerating from the end of the first quarter when its gain stood at 2,4 percent. Smaller third tier markets have also seen their index gains accelerate in the second quarter of the year, led by the Zambia Lusaka All Share Index, which is up 13,8 percent this year.

Other gainers include the Rwanda RSE Index that is up 13,2 percent, the Tanzanian Dar All Share Index up 12,7 percent and the Ghana All Share Index, which has gained 10 percent. — Agencies.