The NSEASI has become the laggard of the three leading stock markets in sub-Saharan Africa (SSA). It fell Monday for the eighth successive trading session, and its Ytd losses are now close to double-digit.
The short-lived boost from the increase in the country weighting in the MSCI frontier index with effect from 30 May now belongs to the distant past. The start of tapering by the US Federal Reserve in Q1 2014 saw a sell-off on all three exchanges.
Now that the process (of tapering) is formally completed, which had seemed highly likely for several weeks, the only loser has been Lagos.
The NSEASI was last in positive territory Ytd on 01 September, and the culprit has to be the rapid slide in the crude oil price. Investors know full well the impact of such a slide on the FX market, the reserves and the public finances, given the pivotal role of oil revenues in the macro-economy.
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The relative under-performance of Lagos can also be traced to stretched valuations. The NSEASI soared by 47 percent in local currency terms in 2013, and the number of “screaming buys” is much reduced, particularly for non-financials. In Nairobi, valuations for the same stocks (non-banking) are far more attractive.
There have been three sizeable new listings this year (Seplat, Caverton and Lafarge Africa).
