Global events shake African stocks while inflation remains stable


Southern Times Correspondent

African markets have felt the wave of the different global events that occurred last week.

On 15 June 2018, the US Federal Reserve hiked rates by 25bps, responding to good economic conditions and ongoing steady growth outlook in the US which saw the gold price dropping and some stocks and currencies falling.

Although some commodity prices and stocks picked up at the beginning of the week, others are still recovering. The EUR depreciated (-1.4%) over the last week after the European Central Bank expressed its ambition to slow and stop its asset purchase programme by year-end.

However, the EUR fell as the ECB stated that no rate hike was likely before summer 2019, revealing a very cautious monetary stance which has left investors ambiguous. Taking a small glimpse of events that unfolded in the Southern African region, there was a half-baked performance on the stock markets of African countries during the week and most central banks have maintained their interest rates to control inflation which has been stable in most countries. However, most African currencies continue to be weak as the US dollar continues to strengthen. 

The South Africa All Share Index increased 623 points or 1.11% to 56 877 on June 20 from 56 253 in the previous trading session. In terms of its currency the US$/ZAR decreased 0.0418 or 0.30% to 13.7002 on Wednesday June 20 from 13.7420 in the previous trading session.

The annual inflation rate in South Africa fell to 4.4 percent in May of 2018 from 4.5 percent in the previous month and below market consensus of 4.6 percent. The slowdown in inflation rate was mainly due to lower prices of food and non-alcoholic drinks. The effect of higher taxes implemented in April, including the 1pp hike in the VAT rate and higher fuel levies, caused a sharp increase in headline CPI inflation to 4.5% y/y during April from 3.8% in March.

The South African Reserve Bank left its benchmark repo rate unchanged at 6.5 percent. Policymakers said that the current monetary policy stance is accommodative and appropriate given the current state of the economy and the inflation trajectory. The central bank committee added that it will closely monitor that the inflation remains within the inflation target rate and will adjust the policy stance if necessary.

In Botswana, the Gaborone Index decreased 4 points or 0.05% to 8513 on Tuesday June 19 from 8517 in the previous trading session. The domestic companies index (DCI) went down marginally by 0.06 percent during the week ending June 15, closing at 8 521.40 points from 8 526.80 points the previous week, as indicated by Stockbrokers Botswana weekly report. For the year-to-date, the index lost 3.82 percent. A total of 9 969 987 securities valued at P57 939 047 were traded during the week.

In terms of the pula, US$/BWP decreased 0.0224 or 0.22% to 10.3891 on Wednesday June 20 from 10.4115 in the previous trading session. The Reserve Bank of Botswana maintained the bank rate at 5 percent as decided at the Monetary Policy Committee (MPC) meeting held on June 19, 2018. The outlook for price stability remains positive as inflation is forecast to be within the 3 – 6 percent objective range in the medium term.  Meanwhile, inflation decreased marginally from 3.4 percent in April to 3.3 percent in May 2018.

According to the latest data from Statistics Botswana, inflation decreased for food and non-alcoholic beverages (from -0.1 to -0.5 percent); alcoholic beverages and tobacco (from 0.7 to 0.5 percent); furnishing, household equipment and routine maintenance (from 2.2 to 2.1 percent); transport (from 6.3 to 6.2 percent); communication (from 1.3 to 1.2 percent). However, this was partly offset by inflation increasing with respect to; housing, water, electricity, gas and other fuels (from 3.3 to 3.4 percent); health (from 1.3 to 1.4 percent); and recreation and culture (from 2 to 2.1 percent).Inflation remained unchanged for clothing and footwear (2.1 percent); education (5.5 percent); restaurants and hotels (3.6 percent); and miscellaneous goods and services (8.5 percent).

In Zambia, the LuSE All Share Index (LASI) closed at 5,490.89 points down by 0.37% points from its previous close of 5,511.47 points. The market closed on a capitalization of K63,029,150,093 including Shoprite Holdings and K28,789,944,113, excluding Shoprite Holdings, trading a total of  46,359 shares worth K114,042 in 31 deals. A share price gain of K0.01 was posted in ZNCO while LAFA recorded a loss of K0.50. Trading activity was also recorded in AELZ, BATA, CECZ, FQMZ, SCBL, ZNCO and CCAF on the quoted tier. Unlike other  countries, the US$/ZMW increased 0.0010 or 0.01% to 9.9310 on Tuesday June 19 from 9.9300 in the previous trading session. The inflation rate in Zambia was recorded at 7.80 percent in May of 2018.

The Zimbabwe stock market decreased to 376.95 points on Tuesday June 19 from 389.13 points in the previous trading day. The inflation rate in Zimbabwe was recorded at 2.71 percent in May. Zimbabwe is a multi-currency economy hence its production/economic activity is mainly influenced by changes in the US$ value, in this regard the Reserve Bank of Zimbabwe has limited capacity to influence money supply.

The Namibian NSX Overall increased 10 points or 0.75% to 1274 on Wednesday June 20 from 1264 in the previous trading session.  And the US$/NAD decreased 0.0609 or 0.44% to 13.6750 on Wednesday June 20 from 13.7359 in the previous trading session. Namibia’s annual inflation rate rose to 3.8 percent in May of 2018 from 3.6 percent in the previous month.

According to Trading Economics, prices increased faster for food and non-alcoholic beverages (3.9 percent from 2.9 percent in April); alcoholic beverages & tobacco (5.4 percent from 4.7 percent); recreation & culture (2.4 percent from 1.6 percent); health (5.7 percent from 5.6 percent) and hotels & restaurants (3.3 percent from 2.4 percent). Also, the cost dropped less for communication (-0.1 percent from -0.2 percent) and clothing & footwear (-5.5 percent from -5.8 percent). Meanwhile, prices slowed for housing and utilities (3.3 percent from 3.4 percent); transport (5.6 percent from 5.8 percent); furnishings & household equipment (1.0 percent from 1.1 percent) and miscellaneous goods & services (4.1 percent from 4.4 percent).

Additionally, inflation was steady for education (9.9 percent, the same as in April). On a monthly basis, consumer prices went up 0.4 percent, after a 0.3 percent gain in April. The Bank of Namibia held its repo rate at 6.75 percent on June 13th, 2018, saying the decision was aimed to safeguard the level of foreign reserves and support domestic economic growth, while maintaining the one-to-one link between the Namibia dollar and the South African rand.

Meanwhile, annual inflation rate averaged 3.6 percent during the first four months of 2018, slowing from 7.4 percent in the same period a year ago, mainly due to lower prices of food and housing.

On Tuesday 19 June, the Malawi MASI, DSI and FSI were unmoved at 30739.20, 20035.43, 8237.82. respectively.  On a monthly analysis base by the Malawi Stock Exchange in May, the market transacted a total of 265,730,032 shares at a total consideration of MK10,613,139,506.15 (US$14,625,963.41) in 164 trades. In the previous month, April 2018, the market transacted a total of 80,903,126 shares at a total consideration of MK3,676,838,010.81 (US$5,066,924.40) in 152 trades. This reflects a 228.45% increase in terms of share volume and a 188.65% (188.66% in US Dollar terms) increase in share value. Of the total shares traded, 13,080,000 SUNBIRD shares were traded as a special bargain. Daily average share trades exhibited similar trends where the market registered an average daily volume of 12,653,811 shares compared to 3,852,530 shares traded in April 2018. The average daily turnover for April 2018 was MK505,387,595.53 (US$696,474.45) compared to MK175,087,524.32 (US$241,282.11) in April 2018, reflecting an increase of 188.65% (188.66% in US Dollar terms).

During the period under review, the yields on the 91 days T-bill, the 182 days T-bill and the 364 days T-bill were steady at 14.0000%, 14.5000% and 15.0000% respectively. Inflation Rates Headline inflation eased by 0.2 percentage points from 9.9% in March, 2018 to 9.7% in April, 2018. Exchange Rates The Kwacha was stable against the United States Dollar in the period under review. Gross official reserves improved from 3.06 months of import cover on 30 April 2018 to 3.16 months of import cover on 31 May 2018.






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