The Editorial Team |

Coronavirus and Oil Price Crash

LAGOS (Capital Markets in Africa) – Coronavirus (COVID-19) creates fear and uncertainty, hitting the global economy and amplifying the volatility of the financial markets. The oil price reaction to COVID-19 was gradually accommodated until March 09, 2020, when, 49 days after the release of the first coronavirus monitoring report by the World Health Organization (WHO), Saudi Arabia floods the market with oil. As a result, international prices drop with more than 20% in one single…

Brighter than expected, but cloudy in patches by Nuveen

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LAGOS (Capital Markets in Africa) – During the Cold War, a group of atomic scientists began publishing the Doomsday Clock, a representation of how far away the world was from man-made destruction. It was originally set at seven minutes to midnight but has since been readjusted to between 17 and two minutes to, without quite ticking on to Armageddon. More than a decade since the global financial crisis, real estate investors are rather like the…

The Big Picture: Investing in an uncertain world – Invesco’s Q1 2020 Update

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LAGOS (Capital Markets in Africa) – Is this a buying opportunity or the half-way stage in a larger slump? The truth is we don’t know, so we have constructed a range of scenarios that see the S&P 500 anywhere between 1400 and 3000 in 12 months. A probability-weighted approach, adjusted for the recent change in cross-asset correlations, leads to a bar-bell approach in our Model Asset Allocation that favors gold and cash among defensive assets…

What Coronavirus Tests does the World need to Track the Pandemic?

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LAGOS (Capital Markets in Africa) – The imperative to “test, test, test” has become a slogan of the coronavirus pandemic since it was voiced last month by Tedros Adhanom Ghebreyesus, head of the World Health Organization. But the simple goal continues to elude even well-off countries that are struggling to track the spread of the virus among their populations. Germany and South Korea have led the way in rolling out tests on a large scale,…

Private Equity and the Leverage Myth By MIT Sloan School of Management

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LAGOS (Capital Markets in Africa) – Investors have traditionally relied on the mean-variance analysis to determine a portfolio’s optimal asset mix, but they have struggled to incorporate private equity into this framework because they do not know how to estimate its risk. The observed volatility of private equity returns is unrealistically low because the recorded returns of private equity are based on appraised values, which are serially linked to each other. These linked appraisals, therefore,…

After Record Rate Cut, Egypt May Pause to Defend Against Selloff

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CAIRO (Capital Markets in Africa) — After making its biggest-ever interest-rate cut, Egypt is likely to hold fire Thursday as it tries to ringfence its debt from an emerging-market selloff sparked by the coronavirus. While central bank Governor Tarek Amer has said there’s scope for another reduction if needed, nine of 10 economists surveyed by Bloomberg predicted the Monetary Policy Committee will maintain the key deposit rate at 9.25%. One analyst sees a cut to 8.25%. It slashed rates by 300…

South African Banks Cut Deeper Into Junk by Fitch on Virus

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JOHANNESBURG (Capital Markets in Africa) — The credit ratings of South Africa’s five largest banks were downgraded deeper into junk by Fitch Ratings, which cited a deteriorating operating environment following the outbreak of the novel coronavirus. The ratings were reduced by one notch to BB, two steps below investment grade and one notch lower than that of South Africa, Fitch said in a statement late Tuesday. Moody’s Investors Service also lowered its assessment on the…

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