Frontier Market Outlook for August

We have published our latest frontier market outlook. This is a bi-weekly publication that gathers the insight from our locally based investment team.


Talk of triple dip recession in developed markets was overshadowed by continued strong GDP growth in frontier markets.

July even saw a flurry of new issuance in the bond markets, particularly in the Middle East region. Majid Al Futtaim, Bahrain, Qatar, EIB, Emaar Properties all issued with nearly all of these deals rallying from launch. However, this has somewhat flooded the market with primary liquidity, which we expect to see leading to a marginal slowdown in the region.

Away from the US dollar markets, we remain somewhat cautious regarding local currency opportunities. Weak global growth and the ongoing European situation continue to drag on Emerging and Frontier market currencies.

Generally, this points towards US dollar strength and continued risk aversion, in addition to lower commodity prices. Apart from one or two exceptional cases we see hard currency being better supported in the next two months.

On the equity side, most of the markets in Sub Saharan Africa managed to close in positive territory in July, with only Ghana and Mauritius registering moderate declines.

Nigeria had a good month after a lot of companies released strong first half results so we witnessed a good performance particularly from some of the banking stocks such as United Bank for Africa (up 19.3%), Access Bank (up 20.7%), Diamond bank (up 18.6%) and Guaranty Trust Bank (up 15%). Some consumer names like Nigerian Breweries (up 19.1%) and Nestle (up 17%) also did well on the back off earnings announcements.

Moroccan retail investors succumbed to were seeing profit taking in July, especially after Maroc Telecom, always the first listed company to report its first-half earnings and biggest constituent of the Moroccan All Share Index, announced a sharp fall of 22% in earnings of its bottom line due to a large provision for a recently launched redundancy plan.

On the other hand, the Tunisian exchange jumped more than 5% after Tunisia was able to secure long term financing from international partners (USA, Turkey, Qatar)…) and the country‚Äôs economy started to show signs of revival turning the corner. Most listed companies have also released solid 1H12H1 top line numbers figures, with the largest cap. Poulina Holding announcing an 19% increase of its revenues boosted by a 44% jump in export revenues.

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