African Equity Market: On the path of recovery

Despite the Covid-19 pandemic that has engulfed the African continent since Feb-2020 and the associated lockdown measures that were put in place by the government across the continent, major equity markets across the region have continued to recover from their March low, especially in the month of May 2020.

Although on a year-to-date (YTD) basis, all the ten exchanges that we track within the continent remained in the red territory, stock market performance in five (South Africa, Nigeria, Tunisia, Morocco and Mauritius) of the countries recorded a month-on-month (m/m) gain in May-2020.

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The recovery has been boosted to a large extent by the expansionary policies that have been adopted by both the fiscal and monetary authorities to combat the negative impact of the lockdown/Covid-19 outbreak.

Also, the gradual re-opening of economic activities by the government in Nigeria, South Africa, Tunisia, Egypt, and Mauritius have since supported activities at the equity market.

Similarly, rebalancing in the global commodity market amid output cut by Oil exporting countries, easy monetary policy, and gradual reopening of business activities in China, Germany and increasing number of States in the US have since spurred some risk-on sentiment.

Looking ahead, we expect the overall interest in African market equities to strengthen as more countries begin to ease lockdown policies and businesses begin to re-open.