Global bond traders, who ventured into Africa during 2019, were able to reap massive gains, and the dollar-denominated sovereign debt of the continent achieved a total return of 20% since the beginning of the year, more than any other region in the emerging markets.
“Bloomberg News” explained that the local bonds also provided a strong performance, as both bonds denominated in the Egyptian pound and Nigerian “Naira” managed to achieve a return of more than 30% in dollars.
If the world’s major central banks remain in a cautious position next year, this would maintain high returns in emerging markets and increase demand for African bonds.
Bank of America strategists, including David Hanner from London, said Africa was a land of opportunity, and could be one of the main beneficiaries if the United States and China made further progress in trade talks.
In this regard, “Bloomberg” highlighted the top 10 major markets in 2020, as follows:
Egypt is still a favorite destination for investors in securities portfolios, as traders defended it, attracted by the yields on bonds denominated in the Egyptian pound of approximately 14% and the value of its local currency increased by 12% this year, which is its best performance in at least 25 years.
The French bank, Societe Generale, expects the currency gains to increase by an additional 4.5% to 15.35 against the dollar next year.
However, the agency said, the reforms have not attracted the foreign direct investment and jobs that Egypt desperately needs, and investors plan to monitor the Egyptian market to see if the country will witness any anti-government protests, such as those that occurred last September, which affected domestic markets for a short time .
The second largest oil producer in Africa is still suffering from the collapse of crude oil prices five years ago, and the International Monetary Fund said this week that Angola’s economy will suffer a contraction for the fourth consecutive year in 2019.
However, investors were affected by the country’s central bank reforms, including the devaluation of the Angolan “kwanza”, and the devaluation of the currency by 32% against the dollar this year, increased inflationary pressures, but it also eased the foreign exchange shortage crisis that was hindering business. Commercial.
The country in the Horn of Africa is still one of the fastest growing economies in the world, but that obscures the country’s deep problems, as inflation rates there have accelerated to more than 20%, and the country lacks foreign currency sharply.
Prime Minister Abi Ahmed Ali, who won the Nobel Peace Prize this year, resorted to the International Monetary Fund to obtain a loan of $ 2.9 billion for 3 years, a move that was widely welcomed by investors, especially as it would accelerate openness plans and modernize the state-controlled economy .
West Africa’s second largest economy usually has a record of financial waste in the run-up to the elections, but investors plan to monitor the government to see if it is more cautious in its general elections scheduled for the end of 2020, during which President Nana Akufo Addo may seek a period A second term.
The Ghanaian “Al-Saydi” suffered from great pressure and reached the lowest level of the current December, but Renaissance Capital Bank, which recommends clients to buy Ghana’s euro-denominated bonds, said that “Al-Saydi” is now considered one of the most undervalued currencies in Africa.
The French-speaking state plans to hold general elections in October, a move that many analysts had hoped would shape the transition of government to young leaders, but there is a possibility that the competition will be between President Hassan Ouattara, who took power in 2011, and his two opponents, former President Henri Konan, with his own hands. And Laurent Gbagbo.
If it goes that way, the country runs the risk of falling into political turmoil, which appears to have barely ended 10 years ago, said Anne Fruhoff and Malt Lierschidt, two analysts at Tiny Intelligence.
Kenya’s economy is expected to grow by 5.8% next year, making it one of Africa’s most prosperous countries.
Bank of America said that canceling the maximum interest rates last November is an additional reason for optimism for investors, and it should help the government to obtain a credit preparedness agreement from the International Monetary Fund, and that the country’s ability to curb the budget deficit will be the key to the country’s future expectations. East of Africa.
Mozambique completed its debt restructuring last October, since it failed to pay 727 million euros in Eurobonds at the beginning of 2017, paving the way for the government to raise the financing it needs for part of the multi-billion dollar gas projects, and once this is done, it is expected To become the impoverished South African country, and a major source of LNG.
Nigeria’s position as one of the best places to trade interest is likely to continue, as long as the Nigerian Central Bank Governor Godwin Emphiel maintains the stability of the Nigerian “Naira”.
But this has become more difficult, as Nigerian foreign exchange reserves have fallen by 14% to $ 39 billion since last July, and Emphiel indicated that he would allow the reserve to further decline before loosening its hold on the barely-budging currency.
The Johannesburg Stock Exchange data showed that investors in securities portfolios left South Africa collectively this year, and withdrew $ 10 billion from local stock and bond markets.
This came because investors were concerned about the financial crisis