Global Investors are Reassessing the Risk-reward Profiles for African Equities
Image of Nigerian Naira banknotes and coins illustrating financial measures to stabilize the Naira.
Almost everywhere you look in Africa, stock markets are soaring with some hitting unprecedented levels. Egyptian equities, as measured by the EGX 30 index, climbed another 0.45% in the week ending July 10. The benchmark index has surged over 13% since the start of the year in local currency terms – an impressive rally by any measure. Last month, one of the world’s largest asset managers BlackRock said it was liquidating its $400 million iShares ETF which had investments in countries like Nigeria and Kenya, citing tough economic conditions and currency issues. The liquidation points to broader systemic challenges in these markets: currency volatility has made it increasingly difficult for foreign investors to maintain stable returns, alongside market liquidity challenges and restrictions on the repatriation of profits.