Kenya, Nigeria, and Zimbabwe have become the epicentres of an intense battle for stock market glory in Africa, as revealed by the latest Morgan Stanley Capital International Index (MSCI).
The six-month data, ending in June, unveils intriguing trends in dollar-denominated returns for investors across these nations, with each vying for supremacy in the equities market. The MSCI data illustrates the performance of each country's equities market during the first half of 2023.
Kenya, known for its vibrant financial landscape, faced challenges as it posted paper losses of 30.9 per cent, marking the weakest returns among the three contenders. Nigeria, with its robust and diverse economy, reported losses of 24.3 per cent, not far behind Kenya.
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Meanwhile, Zimbabwe's market experienced a 20.7 per cent contraction, showcasing its resilience amidst various economic challenges. However, several African nations emerged as outliers, displaying remarkable strength amid the prevailing trends.
Tunisia's equities market defied the odds, achieving dollar gains of 4.9 per cent. At the same time, Morocco and Senegal also showcased remarkable performances, with gains of 14.8 per cent and 3.6 per cent, respectively.
The Capital Markets Authority (CMA) has attributed the fluctuating returns to foreign investor flight, as investors assessed certain African markets as riskier due to debt distress issues.
This cautious approach dampened interest in the equities market, leading to a net selling position of ($107.77 million) by offshore investors during the six months, with the bulk of sales occurring in March.
However, the situation took an unexpected turn in June, as offshore investors surprised the market by buying shares worth ($1.7 million), ending a 15-month selloff run. This positive trend has continued into July, with foreign investors becoming net buyers in the market for the past three weeks.
Looking ahead, the CMA is optimistic about the potential return of inflows from foreign investors, anticipating that leading central banks will pause on further monetary policy tightening towards the start of 2024.
The CMA has also engaged with MSCI to address perceived barriers to foreign investors investing in Kenya, in an effort to attract more investment to the country's equities market.
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Source: The East African