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Most of the indices under our watch closed in the green zone with the ZSE reversing part of its gain from last week as doubt regarding the length and the sustainability of the rally is rising.


As widely expected, the central bank of Kenya kept its main lending rate unchanged at 10% this week given lower pressure on inflation and given food supplies were likely to improve due to a normalisation of supply, expected short rains and supportive measures taken by the Government. The NSE gained 0.86%.

On the other side, South Africa’s central bank kept its benchmark repo rate at 6.75 percent on Thursday despite expectations for a cut based on easing inflation pressures and a sluggish economy. Next meeting is in November where it is expected that the SARB will cut its rate. Inflation is forecast to start increasing again from mid-2018 onwards which will limit the possibility of further policy easing in 2H18. The JSE gained 0.35%.


Patrick Chinamasa, Zimbabwe’s finance minister stated on Wednesday that the country would not be able to pay the $1.8 bn outstanding debt to the World Bank and African Development Bank until economic fundamentals improve. This marks a change of tone since in April, the finance minister said Zimbabwe had met all conditions to pay the World Bank and AfDB after clearing its arrears to the International Monetary Fund. Zimbabwe is currently facing a shortage in foreign currencies which has translated into a rush to the equity markets as a safe haven for businesses and individuals. Local investors are driving the current ZSE rally. This is especially true for institutional investors who have excess cash in banks, as they prefer equities to money markets due to currency risk. Others who wants to hedge against inflation prefer then to hold real assets fuelling demand which is pushing up share prices. To restore confidence in the market, the central bank announced last week the creation of a $5 mn Zimbabwe Portfolio Investment Fund to repatriate funds to foreign investors specifically on the Zimbabwe Stock Exchange. The ZSE lost 8.49%.


The EGX30 surged 0.62% this week. The main contribution came from the heavyweight Commercial International Bank which edged up 0.15%.


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