Rwanda Stock market: Q2 outlook

The Rwanda Stock Exchange has displayed a commendable performance in the first quarter of 2017 amidst cyclical movements not only in Rwanda but also at the Nairobi Securities Exchange. Investors have been on edge due to the upcoming elections this year, but as they transition into the second quarter, expectations are high with inflationary pressures being effectively managed. Celestine Rwabukumba, the CEO of the Rwanda Stock Exchange, outlined some key factors driving the impressive performance of the market. One of the primary drivers behind the stellar performance of the Rwanda Stock Exchange is the improved performance of companies listed on the exchange. Rwabukumba noted that many companies have been posting positive results, with profits steadily increasing. Despite challenges faced by companies like Bralirwa, which saw some setbacks in 2016 due to exchange rates and investment costs, the overall market sentiment has been positive. Investors are beginning to sense the recovery of the market, leading to a gradual upward trend in stock prices. Bralirwa, a key player in the market with renowned brands like Heineken and Amstel, managed to surpass expectations with its recent financial results. While the company has faced hurdles, including fluctuations in exchange rates, its long-term investments indicate a positive outlook. With efforts to export to the region and strategies to mitigate risks associated with exchange rate fluctuations, companies like Bralirwa are working towards sustainable growth despite the challenges. Another significant aspect contributing to the market's success is the rise of retail investors participating in the debt market. Retail investors have shown a growing interest in bonds, with a significant increase in participation compared to previous years. This shift may be attributed to a global trend where investors seek safer options amidst volatile equity markets. The bond market on the Rwanda Stock Exchange has witnessed a remarkable upsurge, reflecting the confidence of investors in this segment. In discussing inflation and its impact on the bond market, Rwabukumba emphasized the importance of maintaining stable economic conditions. While inflation rates fluctuate, a well-managed economy can absorb such variations without causing significant disruptions in the market. Despite inflation hovering around 7.7% in March 2017, the Rwandan economy has shown resilience, allowing investors to navigate potential challenges effectively. Lastly, the recent downgrade of South Africa to junk status has presented an opportunity for the Rwanda Stock Exchange to capitalize on the situation. With South Africa facing economic uncertainties, investors may seek alternative markets with better returns, potentially benefiting exchanges like Rwanda and Nairobi. The diversification of investment options and the ability to offer stable returns in times of global economic turbulence position Rwanda Stock Exchange favorably. As the market gears up for the second quarter of 2017, the Rwanda Stock Exchange remains a beacon of stability amidst turbulent times. With a well-performing company sector, growing retail investor base, and strategic positioning in the bond market, the exchange is poised for continued success. Rwabukumba's insights shed light on the resilience and potential of the Rwandan market, offering a glimpse into the promising outlook for the upcoming quarter.