The NSEASI still on a roll
Since our last look at three stock market indices in sub-Saharan Africa (SSA), the Lagos all-share has continued to outperform both Nairobi (NSE 20) and Johannesburg (all-share). In local currency terms it has gained 37.1% ytd, compared with 16.5% for Nairobi and 13.0% for Jo’burg. It was still in negative territory ytd in early May but has surged, driven largely by the offshore investor response to the fx window for investors and exporters (NAFEX). The Q2 reporting season also brought some strong results from leading banks and non-banks.
- This surge in five months has not been a stampede. Turnover ytd has averaged just US$12.2m equivalent at the interbank rate, and US$18.2m since the watershed on 09 May. The trend is downward. Foreign investors’ share of transactions ytd is little changed from 2016. NSE data does show, however, that they committed N123bn (net) to the market in August.
- The NSE has benefited from a “sweet spot”. The oil price is off the floor, reserves accumulation has been impressive and the FGN has made some positive steps on deficit financing. Longer term structural reforms have been slow in coming.