There seems to be a case of a lot of talk but little action coming our way. Data-driven Fed may leave interests rates lower for longer as report shows the US added fewest jobs in six years last Month. Reading from the past two months, there is a trend of slowing job growth. The answer was not long in coming as the dollar weakened against other currencies globally, a positive scenario for African currencies.
JSE ASI was up 0.28%. S&P Global kept its rating unchanged: the foreign-currency rating was kept at BBB-, one level above junk, and the local-currency rating was affirmed at BBB+. The rating agency also maintained its negative outlook and warned it could lower it should policy measures fail to turn the economy around. Quite an alleviation for the country where a downgrade could have prompted forced selling by some funds that are prevented by their mandate from owning junk-rated securities. Next deadline is December to demonstrate further concrete implementation of reforms that are underway. Following S&P’s decision and weaker dollar, the rand traded Friday at its lowest level this month at R15.10/$ breaking the crucial technological and support level of R15/$. In parallel, the Standard Bank Purchasing Managers' Index (PMI), rose to 50.2 in May from 47.9 in April, climbing above the 50 mark that separates growth from contraction. The increase was driven by new orders on the back of rising external demand as well as new clients and investments, which also positively impacted employment during the month. These data are welcome however further positive data will be necessary to prove the infliction.
NGSE ASI decreased by 4.39%. The economic situation seems to further deteriorate in Nigeria. Ecobank fired 1040 workers this week after the Diamond bank plc reportedly fired 200 employees recently.
The Central Bank of Nigeria announced last week the launch of a more flexible exchange rate policy however investors are still waiting for more details which creates uncertainty on the market.
Making the case even more difficult is the statement made by the National Bureau of Statistics which stated on Tuesday that the country recorded a decline of N793.5bn in the first quarter merchandise trade to close at NGN 2.72tn from NGN 3.51tn in the fourth quarter of 2015, the first time in the last seven years. According to the bureau, the drop in the first quarter trade represented a decrease of about 22.6% over what was recorded in the previous quarter.
NSE ASI was down 1.41% as the Central Bank of Kenya (CBK) cut its rate for the first time in almost a year last week. Market focus turned to bonds as a result, driving up the value of the State paper.
BRVM-Composite was down 1.45%. Bank of Africa-Mali shares started trading on the West African bourse. Ivory Coast's government has approved the sale of the state's 10% stake in NSIA Banque Cote d'Ivoire as part of a privatisation programme, 5% of the lender will be ceded to Ivory Coast's cocoa and coffee marketing board, the Coffee and Cocoa Council. The remaining shares will be sold via West Africa's regional BRVM bourse.
Egyptian Exchange was up this week as EGX30 index increased by 1.15%. Cleopatra Hospital shares started trading on the Egyptian bourse.
