No escape for African stock markets

Emerging and frontier economies remain under pressure from the two related drivers of global financial markets, the normalization of US monetary policy and the recovery of the US dollar. The slowdown in the Chinese economy has not been helpful, either. Johannesburg enjoyed a short-lived rally in August but otherwise, the trend since May has been a steady sell-off. The Lagos all-share index (NSEASI) has lost 18.5% ytd, Nairobi (NSE 20) 25.3% and the Jo’burg all-share 11.2% in local currency terms. Lagos and Nairobi are in the firing line, and Jo’burg has little cover.

  • Average turnover on the NSEASI peaked at N9.0bn in January but has since slowed to N5.0bn ytd (US$13.8bn at the NAFEX window).
  • Trades by foreign portfolio investors (FPIs) have declined since January but the recent direction has been neutral. NSE data show a net inflow of N2bn in August and a net outflow of N3bn in September.
  • Daily turnover in Nairobi has averaged KES740m ytd (US$7.2m). One company (Safaricom) is the most traded stock on more than half the trading sessions.


Performance of three SSA stock market indices, 2018 (% chg ytd, local currency units)

Sources: Nigerian Stock Exchange; Nairobi Stock Exchange; Bloomberg; FBNQuest Capital Research


  • We struggle to see any respite for the NSEASI in the short term. The global backdrop is a disincentive to FPIs, while local newsflow and corporate earnings are generally uninspiring.
  • While the CBN governor has said that the authorities’ latest spat with MTN Nigeria is close to resolution, the company’s promised IPO will have again been pushed back. It is the largest non-oil company in Nigeria, and the offering would provide exposure to a sector representing 8.7% of GDP in 2017. We read that a N140bn sale would allow the preferential shareholders to exit although there has been no public information on size. A much smaller offering by an aviation holding company is on the blocks to raise N1.8bn.

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