African bourses expected to have a championing year - CNBC Africa

African bourses expected to have a championing year

Special Report

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The Nigeria Stock Exchange is the biggest bourse in Africa. PHOTO: Nigeria Stock Exchange

“There are 19 bourses across Africa. We’re not seeing the establishment of new bourses but we have seen a pickup in liquidity last year. That’s been an ongoing frustration for us, but we expect a little bit more activity in terms of new companies coming to market,” Investec Asset Management portfolio manager Joseph Rohm told CNBC Africa.

“We have seen some liquidity events and we expect more, especially as we had a good year for African bourses.”

According to Rohm, 2013 saw Nigeria up 45 per cent in dollars, Kenya up 37 per cent in dollars and Zimbabwe up 33 per cent in dollars.

The only laggards in the African market were with the North African countries, which continue to suffer the aftermath of the Arab Spring.


“Nigeria is our biggest country weight across the African portfolios, and it had a very strong year last year. That was the key strong performer for us across the portfolios. With Nigeria, the macroeconomic fundamentals have been very strong,” said Rohm.

“It’s still enjoying very good growth, runs a current account surplus and it has one of the lowest external and public debt ratios amongst emerging markets. Those fundamentals are likely to continue.”

Rohm added that the stable political climate added to the bourse’s success, but what might bring winds of change is this year’s presidential elections for the West African nation,  which brings slight uncertainty, but also means that governments are likely to spend.

“We see asset prices being supported in Nigeria, [and] what’s also changed this year is that Sanusi Lamido Sanusi, the central bank governor, steps down in June. He’s been quite phenomenal. He’s reduced inflation, stabilised the naira and he’s also cleaned up the baking sector,” Rohm explained.

“That brings a little bit of uncertainty especially with regard to the naira, but we see it being supported again by the strong macroeconomic fundamentals. We’re unlikely to see a big policy shift by a new central bank governor especially because Nigeria doesn’t benefit from a weaker naira.”

East Africa’s bourses are equally expected to perform positively in 2014, and International Monetary Fund growth forecasts for the year continue to be strong.  

“We expect GDP growth of over five and a half per cent for sub-Saharan Africa, and that translates to very strong earnings growth for our companies. The operating environment for our company continues to be very strong, particularly in East Africa, because that region is doing really well and there’ve been some significant developments in Kenya over the last year,” said Rohm.