February 2017’s Best & Worst Performing Frontier Markets
On a monthly basis, Frontier Market News will look at the best and worst performing Frontier Markets. Here’s the list for February 2017.
Best Performing Frontier Markets
1st – Jamaica (9.32%)
- Jamaica Stock Exchange Ltd. (78.57%)
- Seprod Ltd. (40.17%)
- Lime (36.97%)
After placing fourth in January’s best performing Frontier Markets, Jamaica maintained its momentum and climbed to the top of this month’s top indexes, recording a 9.32% increase. The Caribbean powerhouse’s economy recorded a year-on-year growth rate of 1.3% in the last quarter of 2016, primarily buoyed by a 16% expansion in the agriculture, forestry and fishing industries.
The International Monetary Fund (IMF) also heaped praised in February after mentioning that Jamaica is on track to meet its targets, which includes an improvement in its primary surplus balance, inflation and financial stability. As a result, Jamaica now has access to a $600 million loan from the IMF (although the Bank of Jamaica’s Governor Brian Wynter says there will be no need to immediately draw down these funds), as well as a $50 million loan from the Inter-American Development Bank received in December 2016.
2nd – Tanzania (8.29%)
- Kenya Airways (26%)
- Nation Media Group (14.73%)
- KCB Group Ltd (6.53%)
Tanzania was the fourth worst performing Frontier Market in January, but has recovered and erased its loses over the course of 28 days.
Dual-listed Kenya Airways, which declined by 23% in January, saw the value of its shares increase after the company announced that it is planning on undertaking a joint venture with Tanzania’s Precision Air Services, which includes modifying the terms on routes, capacity and the price of tickets.
Turnover on the Dar es Salaam bourse also declined by 44% after investors patiently waited for news on Vodacom to launch its initial public offering (IPO) on the exchange. The telecommunications company announced that it plans to raise $213 million by selling 560 million shares in the IPO. Vodacom is currently the largest operator in the country, commanding 31% of the market.
3rd – Ukraine (7.95%)
- Raiffeisen Bank (11.34%)
- Ukrnafta (9.97%)
- Motor SICH (9.75%)
Ukraine’s stock exchange finished as the 5th best Frontier Market in January and maintains it top 5 status in February after recording an increase of just under 8%.
Despite the myriad of political drama in the backdrop, the reformation of Ukraine’s banking sector continues to drive the economy and stock market forward. As a result, Raiffeisen Bank, the bourse’s best performer, saw an after-tax profit of $140 million in 2016. Oil and natural gas giant Ukrnafta recently announced its intention of investing in hydrocarbon production and acquiring new electric pumps in order to stabilise production volumes.
4th – Kenya (7.17%)
- Kenya Airways (26.6%)
- Standard Chartered Bank Ltd. (24.24%)
- Kenya Electricity Generating Company (17.31%)
Kenya was unfortunately the worst performing Frontier Market in January after its stock exchange suffered a 12% decline, but has now found itself on the opposite end of the spectrum after a positive set of results in February.
The market was busy in February and one of the main talking points was the listing of the first ETF on the Nairobi Stock Exchange, the NewGold ETF, which will track the price of gold and has also been listed on the stock exchanges of Botswana, Mauritius, Namibia and Ghana.
Kenya Electricity Generating Company (KenGen), which generates around 80% of the electricity used in Kenya, has also enjoyed an eventful month. Not only has the company announced its intention to sell its 5.3% stake (351 million shares) in a South African pension fund, but it also begun its search to replace the outgoing CEO, Albert Mugo, with hopes that he or she will take over by August 2017.
5th – Slovenia (6.78%)
- Intereuropa (29.37%)
- Pozavarovalnica (16.14%)
- Cinkarna Celje (11.62%)
Slovenia completes the list of top performers for the month as the Ljubljana Stock Exchange enjoyed a 6.78% rise over the course of the month and has inspired optimism among investors, with the standout performer being logistics company Intereuropa.
Worst Performing Frontier Markets
1st – Egypt (-5.8%)
- Orascom Construction Ltd. (-16.81%)
- GB Auto (-15.26%)
- Credit Agricole Egypt (-12.82%)
Egypt was the best performing Frontier Market in 2016 but has regressed to the worst performing market in February 2017, particularly after the Finance Ministry proposed a tax on stock transactions (0.2% stamp duty on both buyers and sellers) as well as an appreciation in the Egyptian Pound.
GB Auto’s share price dropped after the automotive industry council released a report detailing a fall of 55% in month-on-month car sales sold by the company in November 2016, which coincided with the flotation and rapid depreciation of the Egyptian Pound, prompting analysts to expect a net loss in 4th quarter earnings for 2016.
2nd – Cyprus (-2.73%)
- Pandora Investments (-25%)
- Cosmos Insurance Ltd. (-24.05%)
- Aiantas Investments Ltd. (-20%)
Despite a list of positive news emanating from Cyprus, including an improving economy and a boost in tourism, the stock exchange did not follow suit and saw its finance-related stocks decline in February. A likely reason behind the decline is that investors are waiting to see if the situation in Greece will continue or die down of the course of the year, so a sell-off in banking stocks was done in order to insulate them from any collateral damage that may occur.
3rd – Nigeria (-2.72%)
- UACN Property Development (-35.76%)
- Forte Oil (-33.04%)
- Vitafoam Nigeria (-28.03%)
Investors are not bullish on Nigeria at all, especially after the West African nation’s economy shrank by 1.5% in 2016, marking the first full year drop since 1991.
It was a busy month for the three main losers: UACN Property, the biggest loser in the stock market in February, experience a fall in its share price after profit warnings filtered through into the minds of traders and contributed to the bearish sentiment towards the company; energy company Forte Oil had an underwritten N9 billion bond listed on the Nigerian Stock Exchange in order to raise more capital; and Vitafoam are in the middle of a court case involving the payment of wages to its employees.
4th – Morocco (-2.47%)
- Timar (-17.71%)
- Jet Contractors (-11.42%)
- Sonasid (-11.17%)
The Casablanca Stock Exchange’s five month bullish run, which also helped it rank as one of the top 5 Frontier Markets in 2016, came to an end in February after it posted a 2.47% decline. Moroccan officials are also looking for ways of boosting the tourism sector, which has suffered due to political issues and terrorist attacks in the MENA region.
5th – Namibia (-2.26%)
- Anglo American (-11.62%)
- Bidvest Namibia (-11.15%)
- Mediclinic International (-8.71%)
Completing the list of worst performers is the Namibian Stock Exchange, which experienced a 2.26% drop over the course of the month.
Anglo American’s stock price fell the most despite a positive announcement of the company’s preliminary results for 2016 where revenues have risen by 30% from $4.7bn in 2015 to $6.1bn in 2016. Investors are possibly waiting to find good entry points on the market in order to take advantage of a potential rise in price.
On the other hand, the financial results for Bidvest were much more gloomy as operating profits took a huge hit and recorded a fall of 82%. Sebulon Kankondi, the group CEO, said that the results from all divisions were disappointed and had filtered through into the overall lackluster outcome.
Year-to-date (28th February 2017)
Jamaica (20.45%); Kuwait (18.01%); Ukraine (17.89%); Kazakhstan (14.71%); Argentina (13%)
Kenya (-6.02%); Nigeria (-5.75%); Botswana (-3.7%); Saudi Arabia (-3.3%); Egypt (-3.3%)
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