Taking temperature of Africa's markets

08 February 2015 - 02:00 By Brendan Peacock
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The Johannesburg skyline. File photo
The Johannesburg skyline. File photo
Image: Daniel Born

Specialised benchmark index maker S&P Dow Jones Indices has sliced up African markets to see which regions and countries have delivered the strongest performance this year.

South Africa led the way during the first month of 2015, whereas west Africa struggled because of security issues and weak oil prices.

According to the firm, South Africa, Namibia, Kenya and Egypt have started the year well, with all four markets now up more than 20% over the past 12 months in dollar terms.

Tim Edwards, the senior director of index investment strategy at S&P Dow Jones Indices, said overall the S&P All Africa index returned 1.4% in January.

South Africa's equity market and its fixed-income instruments both delivered, with the S&P South African Sovereign Bond Index returning 6.8% for the month. The index for inflation-linked bonds was flat.

The S&P South Africa Composite Index rose 3.16%, and the measure of the country's blue-chip stocks - its South Africa 50 Index - trailed the composite index by 0.2 percentage points.

Investors in listed property saw a 6.8% total return and those who backed consistent dividend payers would also have had a good month.

"The South Africa Dividend Aristocrats came a close second with 6.6%," Edwards said. This index targets stocks that consistently grew dividends over the past five consecutive years.

By sector, healthcare and information technology started 2015 with the highest returns. Energy and telecoms have been the laggard sectors.

The only local index to provide a negative return during January was the Preference Share Index, down by 0.31%.

Regionally, the S&P North Africa 15, consisting of the 15 largest and most liquid companies listed in Egypt, Morocco and Tunisia, returned 2.96% in January, while the East Africa 10 returned 1.05% and the West Africa 25 contracted by 16.86%.

Stripping out South Africa from southern Africa, the region performed poorly, with the 10 most liquid stocks falling 3.35%.

The S&P All Africa Select - the 100 most liquid stocks on the continent, including 50 from South Africa - dropped 3.03%. Remove South African listed equities from that index and it fell even further, by 8.12%.

Nigeria's market is still showing signs of reeling from Boko Haram's terrorist attacks and a weak oil price . Nigeria's market placed last among African country equity indices, dropping 17.08% in January, capping off a 31.46% fall during the pa st three months .

In African fixed-income markets, Edwards said the majority of S&P indices showed gains, while South Africa's sovereign bond index showed the most notable performance. Ghana provided the highest yield at 23.89%, returning just 2.15%.

Globally, the S&P 500, measuring US equity markets, fell 3% in January, the Europe 350 returned just 0.04%, while the Global 1200 was down by 1.8%.

S&P's benchmark index for developed markets fell 1.65%. Emerging markets performed better on the whole, with the emerging broad market index returning 0.38%.

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