The Markets

LONDON (Capital Markets in Africa) – Time is fast running out on Brexit and there’s still no solution in sight — yet, pound options traders are remarkably sanguine. The cost of protecting against price swings in sterling has fallen to an almost three-month low even after U.K. lawmakers rejected Theresa May’s withdrawal plan and told her to renegotiate it with the European Union, which has warned it won’t budge. Given the risk of the whole deal…

LAGOS (Capital Markets in Africa) – Traders defied all the jitters over a global economic slowdown and piled into emerging-market ETFs for a 16th straight week. Investors added $3.9 billion to stock and bond ETFs across developing nations as well as those that target specific countries in the week ended Feb. 1 — the most in more than a year, according to data compiled by Bloomberg. That’s pushed up this year’s inflows to $11.8 billion….

CAIRO (Capital Markets in Africa) – Goldman Sachs did not expect the Central Bank of Egypt’s decision to suspend the currency repatriation mechanism to make the exchange rate more volatile, despite its recent appreciation. It noted that the pound has been stable even though the majority of portfolio flows to the local bond market over the past two years have taken place outside the repatriation mechanism. It added that the depreciation pressure from the selloff…

LAGOS (Capital Markets in Africa) – Guinness Nigeria Plc sees a tough economic environment in Africa’s most populous country and a volatile naira ahead of looming presidential elections in February. The unit of U.K. drinks giant Diageo Plc is monitoring the Nigerian currency to make sure there’s no significant hit to costs, Stanley Njoroge, head of finance and strategy at Guinness Nigeria, said on an investor call in Lagos on Thursday. The brewer sees disposable income under pressure for…

NAIROBI (Capital Markets in Africa) – Kenya should issue local-currency debt outside the country to check depreciation of the shilling, rather than managing the unit, its Capital Markets Authority said. The International Monetary Fund reclassified the shilling from “floating” to “other managed arrangement” in October to reflect the currency’s limited movement due to periodic central bank interventions, saying the unit was overvalued by about 17.5 percent. “There are opportunities for Kenya to consider adopting alternative…

TUNIS (Capital Markets in Africa) – Citi Research indicated that the Tunisian dinar (TND) has been under pressure since early 2018, as the exchange rate depreciated by 20% in 2018. It attributed the weakening of the dinar to the sustained fiscal and current account deficits, as well as to the very limited progress in economic reforms, even though the country has a financial agreement with the International Monetary Fund that is linked to achieving pre-set…