The JSE accelerates past Nairobi and Lagos

Our latest look at the three stock markets we track in sub-Saharan Africa shows that the JSE (Jo’burg all-share) has raced ahead of both Nairobi (NSE20) and the NSEASI, having posted double-digit growth ytd since mid-April. Jo’burg has been a beneficiary of the signals that the normalization of US monetary policy has stalled. Emerging markets have seen a turnaround in foreign portfolio investor (FPI) sentiment. In contrast, daily turnover on the two frontier exchanges has disappointed, averaging US$9.4m in Lagos and US$6.2m in Nairobi this year.


  • The relief rally on the Lagos exchange after the elections in February and March was negligible, perhaps because the outcome was widely anticipated. In South Africa legislative elections are due this Wednesday, and the market has taken little notice. There is little doubt that the African National Congress (ANC) will be re-elected under the reform-minded Ramaphosa presidency: debate centres on a possible decline in the ANC’s share of the vote.
  • We struggle to identify a trigger to boost the Lagos market. The Q1 2019 reporting season was underwhelming with a few exceptions. Nor has the recovery of the crude oil price helped despite the established linkages between the price and the non-oil economy. We would welcome signs that the banks are achieving the loan book growth of around 10% for the year, which has been their guidance. Sizeable new listings could also energize FPIs.


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

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


  • The enthusiasm of two core investor groups remains lukewarm. Domestic equities represented just 6.6% of the PFAs’ assets under management in January, compared with 9.7% one year earlier.
  • Data from the Lagos exchange tell us that FPIs represented 51% of turnover in March but that their transactions amounted to a net outflow of N4bn. (An international source estimated the stock of FPI monies in Nigeria in March at US$5bn in equities and US$12bn in fixed income.)

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