January 2017’s Best & Worst Performing Frontier Markets
By James Eugene
On a monthly basis, Frontier Market News will look at the best and worst performing Frontier Markets. Here’s the list for January 2017.
Best Performing Frontier Markets
1st – Kuwait (19.1%)
- Hayat Communications (130.3%)
- Kuwait Real Estate Holding Co. (106.4%)
- Kuwaiti Syrian Holding Co. (96.7%)
The Kuwait Stock Exchange was January’s best performer, raising by just under 20% over the month. The market recorder three consecutive weeks of rallies while its neighbouring Gulf markets produced an array of mixed results.
The prospect of its first dollar-denominated bond sale, as well as Pakistan’s upcoming promotion to “Emerging Market” status are the reasons behind the rise. The former is expected to raise up to $10bn dollars, while the latter will allow Kuwait to gain a larger waiting in MSCI’s Frontier Market Index.
2nd – Argentina (13.2%)
- Petreolera Del Conosur (48.7%)
- Petrobras Argentina (41.6%)
- Pampa Energia (36.8%)
Argentina was 2016’s 3rd best performing Frontier Market and has continued its bullish run into the first month of 2017. Good news has been emanating from the South American nation recently, the most notable being interior minister Rogelio Frigerio’s assertion that inflation will be lower this year, perhaps around the 17% mark.
New additions to the bourse, Petreolera Del Conosur and Petrobras Argentina, were the best performers of the month. Pampa Energia completed the top 3, but a recent announcement from Zacks Investment Research which has downgraded it from “buy” to “sell” may have a negative impact on the share price in the next few weeks.
3rd – Kazakhstan (12.0%)
- KazMunaiGas Exploration (29.3%)
- Kaz Minerals Plc (26.4%)
- Kazakhstan Electricity Grid (12.4%)
Alongside Argentina, Kazakhstan was also one of 2016’s best performers. Not only have copper prices helped the likes to Kaz Minerals Plc, but numerous ratings agencies have either upgraded their ratings of the stock to “buy” or “add”.
On a macroeconomic level, Kazakh President Nursultan Nazarbayev listed five priorities for Kazakhstan’s next stage of modernisation, including: accelerated technological progress; expansions of the business sphere; macroeconomic stability; improving human capital; and reforms to fight against corruption.
4th – Jamaica (12.0%)
- Berger Paints Jamaica Ltd (105.4%)
- Pulse Investments Ltd (100%)
- Kingston Wharves Ltd (64.9%)
The Jamaican Stock Exchange has been on a great run for the past few years and looks like it will maintain its great performance.
Its best performer, Berger Pains Jamaica Ltd, increased by over 100% in a month after recording its strongest-ever quarterly performance which effectively doubled its profit. Investment firm Jefferies LLC also hailed Jamaica’s positive results, which bodes well for the Caribbean nation.
5th – Ukraine – 8.8%
- Donbasenergo (20.7%)
- Ukrnafta (11.4%)
- Raiffeisen Bank (7.66%)
Ukraine’s stock exchange completes the list of best performers, recording an increase of 8.8%. Ukrnafta, the second best performer, recently announced its plan to invest 2.6 billion Hryvnia ($100 million) to stabilise its production. The European nation has also publicly expressed plans to pursue trade deals with Israel, China and Canada as soon as possible.
Worst Performing Frontier Markets
1st – Kenya (-12.0%)
- Arm Cement Ltd (-23.3%)
- Nation Media Group (-19.9%)
- Kenya Airways Ltd (-19.7%)
The Nairobi Stock Exchange is ranked as one of the worst performing markets in the world, let alone among Frontier Markets. After shedding over sh100 billion in 2016, the market continued its bearish performance in January.
The likes of Nation Media Group continued its restructuring process after dismissing even more journalists. Kenya Airways has recently seen an increase in passenger traffic in the last quarter of 2016 despite operating a smaller fleet.
2nd – Slovakia (-3.8%)
- Banka Slovenski (-43.7%)
- Slovnaft (-2.86%)
- Vseobecna Uverova Banka (-2.02%)
Although this decline isn’t as large as Kenya’s, Slovakia ranks as the 2nd worst performing Frontier Market in January.
There has been a generally negative outlook on its banking sector, eventually weighing in on the price of stocks such as Banka Slovenski (largest decliner) and Vseobecna Uverova Banka. Refinery company Slovnaft has said that its ready for the extreme cold weather to hit Slovakia.
3rd – Nigeria (-3.6%)
- Guinness Nigeria Plc (-26.6%)
- N.E.M Insurance Company (-22.9%)
- Forte Oil Plc (-19.9%)
Nigeria’s stock exchange has faced a lot of troubles of the last few years and the sentiment still lingers. Both the World Bank and IMF have predicted that Nigeria will grow by one percent or less, which will not do the country any favours as it tries to attract move investors.
Citing the government’s FOREX policy and the weakening on the Naira, Guinness Nigeria recorded a N2bn loss and, along with Forte Oil, has witnessed their share prices decline consistently over the last few years.
4th – Tanzania (-2.8%)
- KCB Group Ltd (-23.9%)
- Kenya Airways Ltd (-23.1%)
- CRDB Bank Plc (-14.0%)
Tazania’s Dar es Salaam Stock Exchange hit an eight year low in January, but rebounded towards the end of the month after numerous companies posted good results. There is also further optimism after the World Bank approved a $305 million loan to expand the port of Dar es Salaam.
5th – Saudi Arabia (-1.9%)
- Arabian Cement (-19.1%)
- Alawwal Bank (-18.4%)
- National Medical Care Company (-17.2%)
Finally, Saudi Arabia’s Tadawul completes the list of worst performers. Arabian cement topped the list of poor performing stocks after reporting an 84% drop in net profits in the final quarter of 2016.
There is good news on the horizon for Saudi Arabia however: the move to a T+2 trade cycle; MSCI’s praise of market reforms; and the progress made on Saudi Aramco’s IPO will definitely catch the eye of many potential investors in the near future.
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