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The end of the year comes with its share of surprises and there were admittedly more moves than I would have anticipated.

 

In Egypt, inflation increase is decelerating as evidenced by the latest data published by the official statistic agency CAPMAS. Urban consumer prices increased by 26% last month compared to 30.8% in the previous year while food and beverages prices rose 32.3%. It seems that the effects of the currency flotation have started to wear off paving the way for an increase in interest rates from the Central Bank in the near future. The Central Bank has kept rates unchanged at 18.75% during its last meeting but it had been increasing rates to cool off the effect of the devaluation on food prices. Its next meeting will be held in December and the likelihood of an interest rate cut is increasing through next year. The EGX30 lost 1.97%.

The JSE lost 2.42%. It was a shaky week in South Africa as Steinhoff home retailer announced that due to accounting irregularities, the company CEO had to resign. No further detail has been given regarding the nature of the irregularities. Steinhoff is now looking for ways to boost its liquidity by selling around $1-2bn worth of assets. The company has stated that it has enough liquidity to fund its existing operations. The auditing firm PwC has been designated to investigate the accounting problems. South Africa’s finance minister is looking into how much exposure the country’s pension funds have to the company. Steinhoff has been under investigation for two years irregularities by the state prosecutor in Germany for alleged accounting irregularities. Four current and former managers are under suspicion of having overstated revenues at subsidiaries. Steinhoff eextended losses to more than 88% since the start of the accounting misconduct. As a lot of uncertainty surround the case I suggest not staying around waiting for things to clarify and exit the position to any investor currently exposed. Steinhoff changed its primary listing to Germany two years ago so other than sentiment it is more EOH decline that affected the JSE performance this week. EOH is South Africa’s largest ICT service provider. EOH shares plunge is partially related to the Independent Police Investigative Directorate raids this week following alleged corruption at the South African Police Service. These accounting scandals brought shade to positive news which came for the economy this week. Data showed that the economy grew 2% quarter-on-quarter between July and September which was better than anticipated, besides trade surplus grew 10% and finally a 3.3bn rand domestic bond auction witnessed great enthusiasm as investors bid for twice the amount of debt offered.

 

Total Upstream Nigeria Limited (TUPNI), operators of the Egina field announced this week that the $16bn project is expected to be completed in.  The project is being executed within the initial budget and will boost Nigeria’s oil production by 200,000 barrels per day or approximately 10% of its total oil production. Egina has the highest level of local content of any such project in Nigeria. The project meets the Federal Government’s ambitions to boost employment generation, capacity building and industrial capability development. The NGSE rose 3.46%. The index has been on a rising spree lately as foreign inflows has been increasing coupled with positive economic data and rising external reserve both contributing to growth.

 

  • Africa Investor Summit 2018
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