The Markets

JOHANNESBURG (Capital Markets in Africa) – Hopes of a trade truce between China and the U.S. and a more dovish Federal Reserve are giving South Africa’s rand a boost — and President Cyril Ramaphosa some breathing space as he struggles to stabilize the state-owned electricity company while curbing government debt levels. Given the outlook for South Africa’s economy — sluggish growth, a widening fiscal deficit, and the threat of a credit-rating downgrade to junk — the rand shouldn’t be a…

HARARE (Capital Markets in Africa) – Zimbabwe has no plans to intervene in the market for what’s effectively a new currency, Finance Minister Mthuli Ncube said. “Anything that we do in terms of coming into the market is to manage the volatility, but not to intervene,” he told reporters Tuesday after a weekly cabinet meeting in the capital, Harare. “The government is staying out of the market because we are too big — if we…

LAGOS (Capital Markets in Africa) – Gross earnings declined by 15.9% YoY to N620.0 billion, in line with our estimate of N632.8 billion (-2.0% deviation). In contrast, after tax profit improved by 11.3% YoY to N193.4 billion, in line with our N192.2 billion projection (+0.6% deviation). On a quarterly basis, gross and after tax earnings weakened by 4.6% QoQ and 21.1% QoQ to N145.4 billion and N49.2 billion respectively. ZENITHBANK declared a final dividend per…

LAGOS (Capital Markets in Africa) – Nigeria’s biggest banks have found a way of shielding earnings from another year of tepid credit demand — buying up local government bonds that offer among the highest yields in emerging markets. Lenders are reducing credit to companies and consumers hampered by challenges in an economy too dependent on oil — the prices of which have tumbled nearly 30 percent since October. Steep inflation, a lack of foreign exchange and high levels of…

CAIRO (Capital Markets in Africa) – Egypt wants to tear down a strategy that’s left one of the Middle East’s most indebted countries hooked on short-term borrowing. The government is looking to raise the share of longer-dated debt to about 70 percent of annual domestic issuance by 2022 from 5 percent in the last fiscal year, Deputy Finance Minister Ahmed Kouchouk said in an interview. In making a “gradual shift” away from short-term T-bills and toward instruments such as Treasury…

LAGOS (Capital Markets in Africa) – Investors added money to emerging-market exchange-traded funds at the slowest pace this year last week, another sign that the optimism from the start of 2019 is wearing thin. Inflows into U.S.-listed funds that invest across developing nations as well as those that target specific countries totaled $313.1 million in the five days through Feb. 15, a fraction of the $3.97 billion inflow in the previous week, according to data…

LAGOS (Capital Markets in Africa) – Nigerian Breweries Plc (NB) FY’18 results, top line growth came in at N324.4 billion (-5.9% YoY) for the year, in line with our estimate of N320.6 billion (+1.2% deviation). In the same vein, after-tax earnings declined by 41.1% YoY to print at N19.4 billion, although under-performing our estimate of N22.2 billion. The deviation from our profit-after-tax estimate was as a result of negative surprises stemming from higher direct costs, finance…