A fresh buying opportunity beckons those who wish to cash in on oversold stocks in Africa and the Caribbean as the global economy gears for a rebound later in the year. After falling 40 percent over the past year, TNJ’s AfriCarib Equity Index gained 13 percent in the past three months. In the four-weeks to May 15, the index was up 2.4 percent and is expected to continue posting gains through this month (June).
That compares well with other world markets, which were up 2.47 percent year-to-date. The top-performing industries are commodities and banking, which represent more than 50 percent of the indices in Africa and the Caribbean. The biggest gainers in April-May were Nigeria, Egypt and Mauritius, while Ghana, Tunisia, and Trinidad and Tobago were the worst performers. Nigeria’s main stock market was up 17 percent, while Egypt’s leading index rose 9.5 percent as local and foreign investors bought even small caps that previously lagged.
While South African stocks underperformed global peers in the run-up to its April presidential election, concern that the ruling majority may change the constitution did not materialize, and that’s good for investors. The JSE All Share index has rebounded after President Jacob Zuma appointed a respected economic team, although growth is expected to remain lackluster this year. The index advanced 4.9 percent in May, bringing gains so far this year to 10.7 percent.
In Kenya, East Africa’s biggest economy remains susceptible to political instability from last year’s election fracas. The NSE index is down 18 percent year-to-date, but it has been making gains since March and rose 1 percent in May.
In the Caribbean, the Jamaican index rose 3 percent in May, while Barbadian shares stayed flat due to a lack of liquidity after rising in April. Only Trinidad and Tobago performed worse among Caribbean markets, falling 0.4 percent in May and 2.6 percent over the past three months. On the flip side, the islands dodged a major hit from the global economic crisis. The region’s economies are expected to recover more quickly than advanced economies because they were less exposed to the subprime mortgage fallout, according to a recent report from the International Monetary Fund.