SSA Equities Market: Lack Of Reform To Spook Investors


Friday, January 17, 2020   / 03:40PM / United Capital Research / Header Image Credit: IOL


Over 2019, equities in global, emerging and frontier markets trended upwards, on the back of the global easing narratives. However, most equities in the SSA region underperformed their EM and FM peers, as FPIs piled into high yielding EM debt instruments. Of the six exchanges under our watch, only the South African and Kenyan exchange closed 2019 in the positive territory.


The performance in Kenya was buoyed by strong economic growth in H1-19 and the possibility for the removal of interest rate caps, that have constrained banking sector earnings. Meanwhile, for South Africa, it was a tale of two halves as the continued re-assurance by the President to commit to reforms, provided investors with some fundamental justifications for buying equities in H1-19. However, the continued drag to commit to those reforms spurred some capital reversals in H2-19. On the other hand, the benchmark indices in Ghana, Nigeria, BRVM bloc and Mauritius all closed 2019 in the negative territory, largely due to risk-off sentiments by foreign investors and the lack of pro-market reforms.


In 2020, we believe the outlook for EM and FM equities will remain positive, on the back of expected dovish global monetary policies. Specifically, for SSA, we expect interest in equities to remain fundamentally driven, as the heavy-weight market movers - FPIs - continue to look for bold economic reforms as fundamental reasons for buying equities. Thus, in the absence of any new reforms in 2020, we expect sentiments to remain weak.


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Looking Forward


Dec-19 Net Reserves - January 23rd

Dec-19 Benchmark Interest rates - January 27th



Monetary Policy Decision - January 27th

Dec-19 M2 Money Supply - January 27th



Monetary Policy Decision - January 27th

Jan-19 Inflation Rate - January 31st  

Morocco Dec-19 Inflation Rate - January

22nd Dec-19 Money Supply M3 YoY -  January 30th



Dec-19 Inflation Rate F January 17th

Monetary Policy Decision - January 24th

Dec-19 Private Sector Credit- January 29th


South Africa

Dec-19 CPI YoY - January 22nd

Dec-19 South Africa Budget-January 30th


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