This week only 6 out of the African markets under our coverage ended the week on positive territories. The best performers are the NGSE ASI and the MASI.
Nigerian’s budget and planning Minister cut the country’s 2017 GDP forecast to 2.5%. This reassessment is based on tough economic conditions as evidenced by the current recession Nigeria is facing. The President proposed his 2017 budget of 7.3tn naira to lawmakers for which the government plans to borrow 2.32tn naira. The 7.3tn naira budget assumes an output of 2.2 million barrels per day at $42.50 each and an exchange rate of 305 naira per dollar. This rate is well below the black-market rate of 485. The NGSE ASI gained 3.44%. Despite the rally Nigerian shares remain ones of the cheapest in African markets. The forward P/E averages 8 which is even less than Zimbabwe’s.
The MASI increased 3.17% to 11305 this week as Addoha group projected profits around 1bn dirhams for 2016. Historically, the Morocco Stock Market MASI reached an all time high of 13292.27 in January of 2011 and a record low of 8413.72 in August of 2013.
A scandal hit Kenyan banking sector this week as Imperial bank officials allegedly helped Central Bank officials to hide unauthorized debt for years. The NSE ASI is down 1.09%.
The JSE ASI lost 2.37%. In South Africa, Steinhoff International Holdings and Shoprite announced they are in talks to merge their African businesses. The deal would provide Shoprite control over the enlarged business. Investors of both companies did not welcome the news as evidences by the share price reaction as they failed to find the strategic rationale.
The Central Bank of Egypt will issue on Monday, in coordination with the Ministry of Finance (MoF), treasury bonds worth EGP 500 million to support the country's budget deficit. The treasury bonds will be issued through two tranches, 3-year bonds at EGP 250 million and 10-year bonds worth EGP 250 million. The finance ministry estimates the total budget deficit for the fiscal year 2016-2017 at around EGP 319.46 billion. The EGX 30 gained 0.25%.
The DSE ASI lost 2.27%. The worst performers during the week were DCB Commercial Bank down by 6.98%, KCB Bank lost 4.26%, and Tanzania Breweries Limited fell by 2.99%. On another note, Tigo, the second biggest mobile operator, announced its plan to proceed to an IPO on the DSE.
