Nigeria woes portend mixed African equities outlook

Tuesday, February 17, 2015

Subject

Outlook for sub-Saharan Africa's stock exchanges.

Significance

The Nigerian Stock Exchange All-Share Index yesterday rose by 0.52%, its first appreciation following heavy deterioration in demand over the past three months. With a few exceptions, Nigeria's woes are contributing to weakening investor sentiment in sub-Saharan Africa's (SSA) main equity markets which, along with other frontier markets (FM), have been hit by low oil prices.

Impacts

  • Companies with heavy exposure to Nigeria, such as Dangote Group firms, may undergo further share price dips due to high risk perceptions.
  • Power shortages in South Africa are likely to contribute to differentiation between stock performance and that of 'productive' sectors.
  • Given their few listings, volatility in small SSA bourses, eg the Lusaka Stock Exchange, will be driven by individual company performance.
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