The performance of the equity market in the global, emerging and frontier markets was largely negative in H1-2020, the bearish sentiment observed in the market was attributable to the coronavirus pandemic, with investors exiting their positions in riskier assets like equities in favour of safe havens (the US treasury).
This action changed the fortune of the SSA equity market under our watch as Foreign investors in SSA equity market took flight despite the fact that some SSA markets started on a good note with Nigeria’s equity market ranked among the best performers in the world early in the year.
Fastrack to H2- 2020, the narrative changed. The global market turned positive, fueled by the relaxation of lockdown across the world coupled with dovish monetary stances across the globe, giving room for economic activities to rebound.
Nevertheless, save for Nigeria, which witnessed a major correction and surged above it pre-COVID level, sentiment for the majority of the bourses in SSA remained broadly negative due to a relatively high yield environment, poor monetary policy stimulus and the weaker macroeconomic outlook.
While the Nigerian bourse was a clear outperformer (+30.3% YTD), driven by a heterodox monetary policy framework which crashed rates on TBills, followed by the S/African JSE, up 3.2%, Sentiment for Stocks in Mauritius (-26.2% YTD), Ghana (-19.4% YTD), the West Africa BRVM (-17.2% YTD) and Kenya (-12.1% YTD) remained broadly negative.
Looking ahead, we expect a broad-based rebound in 2021on the back of improvement in the overall macro environment.