We are reporting on a fairly challenging week for the markets in Africa and the Middle East. Kenya gave some performance back after more than a fortnight of strongly upward markets. Nigeria’s market had a volatile week on the back of regulatory activity in the banking sector in Nigeria, causing some banks to offload holdings.
Despite being considered by many as an expensive market. Morocco held up well with continued support from institutions putting money to work in their local markets. According to a recently published report by Morocco’s High Planning Commission, the domestic economy is expected to grow by 5.3% in 2009, slightly down from 5.4% in the previous year as the rapid expansion in agriculture offsets lower tourism receipts and remittances by Moroccans living abroad. The forecast is in line with recent forecasts from the central bank, which expected growth of between 5% and 6%.
We saw a jump in trading volume in Botswana. This is a welcome development as our allocation has been very low to this market due to its lack of liquidity. What also made news there was the first appointment of a woman as CEO of the First National Bank of Botswana.
In the telecom sector, there seems to be some consolidation on the way with a flurry of rumors around MTN (Indian merger saga), Zain (selling African business?) and Orascom (IPO of 30% of Tunisian division). Safaricom continues to innovate by launching the country’s first mobile internet portal. As many of you may know, in Kenya, the mobile phone is a common payment device used among its population. On a personal note – not a day goes by without me wondering why we still can’t pay for things using our cell phones in Europe – the technology simply makes so much sense!
The Japanese rating agency R&I (Rating and Investment Information) has confirmed Tunisia’s sovereign risk rating, granting it “A-” with stable outlook. In 1994 the agency rated Tunisia BBB+. “A” is one of the agency’s highest ratings and shows the country’s credibility and its commitment to honor its international engagements. It also follows two previous 2008 ratings by American rating firms, respectively S&P and Moody’s, which also confirmed the resilience of the Tunisian economy.
The UAE, Saudi Arabia and Egypt had a negative week in terms of equity market performance. There was some talk about credit card delinquencies on the rise in the UAE and rising inflation in the Saudi Kingdom. Egyptian equities also took a dive. What was interesting of the price-action was that locals were sellers to a battalion of foreign buyers who have been eagerly awaiting a dip like this to build up positions in the Egyptian market.
The big news of the weekend in the Emirates was Emaar’s bold move to merge with three government related developers. Despite a sharp drop in Emaar’s stock price after the annoucement, it seems that the market needs some time to understand this move. We think it makes much sense and will invest in the stock!
Worth noting is that reportedly trade between the UAE and its fellow GCC members inclreased by almost half from 2007 to 2008. You may remember from our presentation that this trend is one of the key reasons why we believe investors should take a position in the region, these dynamics underpin continued growth in challenged global economic environment.
Qatar reportedly approved a draft law to cut corporate tax to 10% from 35% and to exempt Qatari nationals from the income tax. This only helps to drive further the competiveness of this economy on the world stage. Qatar has also expanded the scope for its securities market which has been renamed the ‘The Qatar Exchange’. The new exchange will attract much wider variety of product listings.
I hope you have a moment to read our weekly updates. You can access them by going to our Silk Invest In the News section.
We look forward to keeping you updated
Kind regards
Baldwin
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