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{"source_url": "https://www.iol.co.za", "url": "https://www.iol.co.za/business-report/economy/the-10-african-markets-to-watch-in-2020-39660022", "title": "The 10 African markets to watch in 2020", "top_image": "https://image.iol.co.za/image/1/process/620x349?source=https://inm-baobab-prod-eu-west-1.s3.amazonaws.com/public/inm/media/image/105296588.JPG", "meta_img": "https://image.iol.co.za/image/1/process/620x349?source=https://inm-baobab-prod-eu-west-1.s3.amazonaws.com/public/inm/media/image/105296588.JPG", "images": ["https://inm-baobab-prod-eu-west-1.s3.amazonaws.com/public/inm/media/image/2019/12/23/31276765africa.jpg", "https://www.iol.co.za/assets/images/header/business-report.svg", "https://collector.effectivemeasure.net/noscript", "https://www.iol.co.za/assets/images/social-icons/linkedin-rnd-ico.svg", "https://image.iol.co.za/image/1/process/620x349?source=https://inm-baobab-prod-eu-west-1.s3.amazonaws.com/public/inm/media/image/105296588.JPG", "https://www.iol.co.za/assets/images/social-icons/email-rnd-ico.svg", "https://www.iol.co.za/assets/images/social-icons/facebook-rnd-ico.svg", "https://www.iol.co.za/assets/images/social-icons/whatsapp-rnd-ico.svg", "https://www.facebook.com/tr?id=794201197427829&ev=PageView&noscript=1", "https://www.iol.co.za/assets/images/social-icons/twitter-rnd-ico.svg"], "movies": [], "text": "The continent\u2019s sovereign dollar debt has generated total returns of 20% since the start of 2019, more than any other region in emerging markets.\n\nThe continent\u2019s sovereign dollar debt has generated total returns of 20% since the start of 2019, more than any other region in emerging markets.\n\nIf the world\u2019s major central banks remain dovish in 2020, that should sustain a dash for higher yields in emerging markets and mean that African bonds remain in hot demand.\n\nAfrica is a \u201cland of opportunity\u201d and could be one of the main beneficiaries if the U.S. and China make more progress on trade talks, said Bank of America strategists including London-based David Hauner.\n\nThe extra yield investors get when buying sovereign dollar bonds in Africa rather than U.S. Treasuries has narrowed almost 100 basis points this year, according to J.P. Morgan Chase & Co.\u2019s indexes. Still, at 461 basis points, that spread remains the highest of any emerging-market region and double that of Eastern Europe.\n\nBut investors face plenty of potential risks in 2020. South Africa could lose its last investment-grade rating, Ghana\u2019s government might ramp up spending ahead of elections, Zambia\u2019s debt crisis could spiral out of control and Nigeria may be forced to devalue its currency.\n\n\n\n\n\nHere\u2019s what to watch for in 10 key markets.\n\n\n\n\n\nAngola\n\nAfrica\u2019s second-biggest oil producer is still reeling from a crash in crude prices five years ago. The economy will contract for a fourth straight year in 2019, the International Monetary Fund said this week. Still, investors have been impressed by the central bank\u2019s reforms, including the devaluation of the kwanza. Its fall of 32% this year against the dollar -- only Argentina\u2019s peso has weakened more -- has increased inflationary pressure. But it\u2019s also eased a shortage of foreign exchange that was crippling businesses.\n\n\n\n\n\nEgypt\n\nEgypt remains a favorite among portfolio investors. Carry traders, attracted by yields of around 14% on pound bonds, have flocked to the Arab nation. The currency has rallied 12% this year, its best performance in at least 25 years -- and Societe Generale SA forecasts it will gain another 4.5% to 15.35 per dollar in 2020. But the reforms of President Abdel-Fattah El-Sisi are yet to translate into the foreign direct investment and jobs that Egypt badly needs. Aware of that, investors will watch to see if there\u2019s any repeat of the anti-government protests in September that briefly rocked local markets.\n\n\n\n\n\nEthiopia\n\nThe Horn-of-Africa nation remains one of the fastest-growing economies in the world. But that masks deep problems: inflation has accelerated to more than 20% and shortages of foreign exchange are acute. Prime Minister Abiy Ahmed, this year\u2019s Nobel Peace Prize winner, recently turned to the IMF for a $2.9 billion, three-year loan. Investors welcomed the move, which should speed up plans to open up and modernize the state-controlled economy. The central bank has already started to weaken the overvalued birr, which had been largely pegged to the dollar. \u201cThis IMF deal is one of the biggest ideological shifts I\u2019ve seen in Africa this decade,\u201d said Charlie Robertson, Renaissance Capital\u2019s London-based chief economist.\n\n\n\n\n\nGhana\n\nWest Africa\u2019s second-biggest economy holds general elections in late 2020, with President Nana Akufo-Addo probably seeking a second term. The country has a history of fiscal profligacy in the run-up to polls and investors will watch whether the government is more cautious this time. The cedi has been under pressure and fell to a record low this month. But Renaissance Capital, which recommends that clients buy Ghana\u2019s Eurobonds, says it is now one of Africa\u2019s most undervalued currencies.\n\n\n\n\n\nIvory Coast\n\nThe Francophone country is set to hold a general election in October. Many analysts hoped it would mark a transition to a younger generation of leaders. But there\u2019s a chance it will be a contest between President Alassane Ouattara, who came to power in 2011, and his long-time rivals Henri Konan Bedie and Laurent Gbagbo. If so, \u201cthe country risks slipping back into the political turmoil it seemed to have escaped barely 10 years ago,\u201d said Teneo Intelligence analysts Anne Fruhauf and Malte Liewerscheidt.\n\n\n\n\n\nKenya\n\nKenya\u2019s economy is forecast to grow 5.8% next year, making it one of Africa\u2019s most buoyant nations. Bank of America says the removal of a cap on interest rates in November is a further reason for optimism and should help the government obtain a standby loan from the IMF. Key to the East African country\u2019s longer-term prospects will be whether it can rein in the budget deficit. Forecast to be 6.6% of gross domestic product this year, it\u2019s one of the widest in sub-Saharan Africa.\n\n\n\n\n\nMozambique\n\nMozambique completed a debt restructuring in October that had dragged on since it defaulted on $727 million of Eurobonds in early 2017. That should pave the way for the government to raise the funding it needs for its portion of multi-billion-dollar gas projects. Once they\u2019re finished, the impoverished southern African country is set to become a major exporter of liquefied natural gas.\n\n\n\n\n\nNigeria\n\nNigeria\u2019s status as one of the world\u2019s best carry trades will probably last as long as central bank Governor Godwin Emefiele keeps the naira stable. That\u2019s becoming harder, with Nigerian foreign reserves having dropped 14% to $39 billion since July. Emefiele\u2019s signaled he\u2019ll let them fall a lot further before loosening his grip on the currency, which barely budges. Fiscal authorities, meanwhile, will try to boost an economy that\u2019s been growing more slowly than the population for the past five years.\n\n\n\n\n\nSouth Africa\n\nPortfolio investors have exited South Africa en masse this year, pulling a net $10 billion from its stock and local-bond markets, according to data from the Johannesburg Stock Exchange. They\u2019ve been concerned by the deepening crisis at state-owned power company Eskom Holdings SOC Ltd., which can\u2019t service its $30 billion of debts without government support, and the increasing chance that Moody\u2019s Investors Service will cut South Africa\u2019s final investment-grade rating to junk. But if President Cyril Ramaphosa makes headway in reforming Eskom, investors will probably be quick to come back. Bank of America and Goldman Sachs Group Inc. both say its inflation-adjusted bond yields are attractive and the central bank has room to cut interest rates.", "keywords": [], "meta_keywords": [""], "tags": [], "authors": [], "publish_date": null, "summary": "", "article_html": "", "meta_description": "Global bond traders who ventured into Africa this year have reaped rich rewards.", "meta_lang": "en", "meta_favicon": "/assets/images/favicon/apple-touch-icon.png", "meta_data": {"fb": {"app_id": 293175074032541}, "viewport": "width=device-width, maximum-scale=1.0, minimum-scale=1.0, initial-scale=1.0, user-scalable=no", "og": {"type": "article", "title": "The 10 African markets to watch in 2020 | IOL Business Report", "description": "Global bond traders who ventured into Africa this year have reaped rich rewards.", "url": "https://www.iol.co.za/business-report/economy/the-10-african-markets-to-watch-in-2020-39660022", "image": {"identifier": "https://image.iol.co.za/image/1/process/620x349?source=https://inm-baobab-prod-eu-west-1.s3.amazonaws.com/public/inm/media/image/105296588.JPG", "width": 3543, "height": 2223}}, "keywords": "business report, economy", "description": "Global bond traders who ventured into Africa this year have reaped rich rewards.", "msvalidate.01": "5A0910AA1A12E32A5352933CF5FD96E9", "twitter": {"site": "@IOL", "creator": "@IOL", "description": "Global bond traders who ventured into Africa this year have reaped rich rewards.", "title": "The 10 African markets to watch in 2020 | IOL Business Report", "card": "summary_large_image", "image": {"src": "https://image.iol.co.za/image/1/process/620x349?source=https://inm-baobab-prod-eu-west-1.s3.amazonaws.com/public/inm/media/image/105296588.JPG"}}, "google-site-verification": "iQCzO2whcLNU6_F3xi1Dck7JMALz7869mBLTQf08wJo", "news_keywords": "business report, economy", "msapplication-config": "/assets/images/favicon/browserconfig.xml", "theme-color": "#ffffff", "section": "business-report/economy"}, "canonical_link": "https://www.iol.co.za/business-report/economy/the-10-african-markets-to-watch-in-2020-39660022"} |
