African stock up in February as global stock falls

A gauge of major African equity markets in February revealed that they posted gains, a stark contrast with some global stock indexes that went into decline.

Stock prices rose from the floor of the Nigerian Stock Exchange to that of Egyptian Exchange, as oil prices stabilised in February oscillating around $35 per barrel. Incidentally, crude oil notched its first positive month since October as the International Energy Agency warned consumers that oil prices would not be always low. “It is easy for consumers to be lulled into complacency by ample stocks today, but they should heed the writing on the wall: the historic investment cuts we are seeing raise the odds of unpleasant oil security surprises in the not-too-distant-future,” it said in its report.

African Markets, an investment guide across the continent, in its weekly email to clients noted that stable oil prices had fed into the equity markets of African countries, impacting them positively. “Oil prices wiped away steep losses on news that Venezuela’s oil minister would meet with fellow oil producers next month. This followed meetings between President Muhammadu Buhari and the ruler of Saudi Arabia, during which they both committed to work towards a stable oil market and a rebound of oil prices,”it said.“That feeling fed into African markets in a natural fashion.”

Africa

The Nigerian Stock Exchange (NSE) All Share Index (ASI) made the most gain rising by 2.7 percent in February as against a 15.77 percent drop the previous month. Stocks such as Seplat Petroleum Development Company Limited helped push the index to the positive zone as it doubled its price in February, rising from N194.2 to N394 per share. Many analysts would consider such appreciation in the price of a stock within a month ‘incredible’.

Overall, more companies saw a rise in the value of their shares as against the previous month despite the economic challenges facing businesses in the country.

Just like Nigeria, the Johannesburg stock market was able to shake off concerns about the South African economy and rand, which have come under increasing pressure. If investors were worried about the most industrialised economy in Africa, they did not transfer such concerns to the equity market as the Johannesburg Stock Exchange (JSE) ASI, rose by 0.6 percent. This might be marginal but still a better contrast to the 0.8 percent decline it experienced in January.

The EGX 30, which is an index of the 30 most capitalized and liquid stocks traded on the Egyptian Stock Exchange, also shook off its losses in January, appreciating by 2.7 percent in February. Not even the depreciation of the Egyptian pound in the parallel market affected it.

But while major African markets were up for the month of February, the S&P 500 lost 0.4 percent and the Nasdaq lost 1.2 percent. Similarly, MSCI’s global stocks index (MSCI: MIWD00000PUS) which measures major developedand emerging markets, fell 0.9 percent for the month.