Eventful month for Africa

March saw financial reports, politics, and fluctuations in interest rates and currencies. Overall, the news was good, writes Karin Fries, fund manager of Carnegie Afrikafond.

Almost all stock markets rose in March, but a stronger krona meant that gains in SEK were limited to a few. South Africa stood out, with both equities and the rand improving substantially and ending March up 7 percent in SEK.
In addition to raising interest rates, the Central Bank of Egypt devalued the pound by some 14 percent, causing the stock market to rise 22 percent. But growth in SEK was a more modest 2 percent.

Most major companies in Nigeria have reported earnings for 2015, and the overall impression is sales are growing by 8 percent. However this is below the inflation rate of 10 percent, and operating earnings are completely stagnant, indicating pressure on both volumes and margins.

New lending by banks in 2015 was 3.5 percent (compared to over 20 percent in both 2013 and 2014), while provisions for bad loans grew by over 15 percent. These figures correspond well with the lower oil prices in 2015. Carnegie Afrikafond’s bank holdings GTB and Zenith issued acceptable results and preserved their dividends, making their yields currently over 11 percent and 13 percent, respectively. The central bank raised interest rates to 11 percent.

Societé des Brasseries du Maroc delivered strong numbers. Volumes increased slightly, and sales of bottled water showed an outstanding increase. The company doubled its dividend, and the stock is now traded at a yield of over 5 percent. The Moroccan central bank recently lowered interest rates to 2.25 percent.

The Constitutional Court of South Africa ruled that Jacob Zuma violated the constitution in his handling of the public protector’s investigation into improvements to his home. The ruling opens the way for various political developments, including a possible removal of Mr Zuma as the country’s president before his planned exit in 2019. Both the rand and fixed income markets were bolstered by the news. South Africa’s interest rate was upped to 7 percent, which contributed to the gains.

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