The Editorial Team |

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

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…

Zambia Eurobonds Extend Losses as Country Flags Restructure

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HARARE (Capital Markets in Africa) — Zambia’s Eurobonds extended losses on Wednesday and its currency tumbled to a record low after Africa’s second-biggest copper producer asked banks for proposals on reorganizing as much as $11.2 billion of foreign debt. The country “intends to implement a liability management of its external debt portfolio to lengthen maturity and enhance its capacity to meet debt-service obligations,” the finance ministry said in a request for proposals sent to lenders,…

Ghana Cuts GDP Growth Forecast to 37-Year Low on Virus Impact

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ACCRA (Capital Markets in Africa) — Ghana’s Finance Minister Ken Ofori-Atta cut the country’s economic growth forecast for 2020 to the lowest in 37 years due to the collapse in oil prices and the impact of the coronavirus. Growth in gross domestic product could slow to 1.5% with a partial lockdown of the economy and may “further worsen in the event of full lockdown,” Ofori-Atta told lawmakers Monday in the capital, Accra, according to a…

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