Deprecated: wp_make_content_images_responsive is deprecated since version 5.5.0! Use wp_filter_content_tags() instead. in /customers/a/2/c/fmgfunds.com/httpd.www/wp-includes/functions.php on line 4773

During the third quarter most African markets joined the global equity market rally. African currencies were also broadly stronger with the exception of the Nigerian Naira, which weakened by 12%. The top performing markets were Egypt +22%, Morocco +8% and Mauritius +7% while Kenya and Nigeria were down -1% and -11% respectively. Most markets finished the quarter on a strong note hinting at a possible reversal of the bearish trend in African markets, confirmed by our technical models that are looking increasingly bullish.

One event that had a major impact on the markets was Kenya’s decision to place a ceiling on banks’ interest rates and a floor on deposit rates. It was a devastating blow to the market causing the bank sector to plummet by around 25% in just a couple of days. The decision was a political move in view of the next general election around the corner, but it was a costly one for investors as well as  the local economy which will suffer a liquidity squeeze.

Another event that impacted performance of the market is the flow of foreign funds. In the search of yield, flows were re-routed from developed markets to emerging market. The trickle-down effect into frontier markets has not yet materialized but this could likely be a pull factor for African stocks in the coming quarters.

Social media & sharing icons powered by UltimatelySocial