Nigeria woes portend mixed African equities outlook

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.