Tunisia tops African emerging markets
Investors may be fleeing Africa as political and economic crises tear countries apart, but Tunisia is stealing a commanding lead among the emerging markets of the continent.
According to an Abidjan-based African Development Bank report, the Tunisian Stock Exchange (TSE) jumped 47.5 per cent gain during the first half of 2000 and has come out as the best performing stock exchange in Africa.
The country's currency, the dinar, dropped in value by 7.3 per cent, but the Tunisian stock market is able to yield 36 percent for dollar investors.
Although Tunisia is not as rich as its neighbors Libya and Algeria, significant oil reserves off its Mediterranean coast should generate substantial income to will promote industrial growth and economic prosperity.
Zimbabwe was in a similar position last year, but lost it after the stock exchange lost 22 per cent of its value in a two-day collapse and fell another 17.5 per cent from the beginning of the year.
Although the Zimbabwe Stock Exchange is considered one of the most liquid markets in Africa, local and foreign investors lost their nerve when squatters began invading white-owned farms in a government campaign to settle landless Zimbabweans.
The Nigerian Stock Exchange took second position with a 20.9 per cent gain. As one market that has escaped the sell-off, Nigeria is tipped to see increased international investment because of its new political stability and the increasing number of privatizations. Religious dissent over Islamic Sharia law in the north is not considered as a risk to investment in the country.
The Zambian Industrial Index takes third position with 12.6 per cent while the Ghana Stock Exchange (GSE) is fourth. The GSE rose to be one of the best performing emerging markets in Africa in 1988 but this year the exchange's performance declined due to political uncertainty ahead of December's election when President Jerry Rawlings steps down.
Other major factors in the decline include the fall in international prices for Ghana's key exports namely cocoa and gold, the rise in oil prices, and the fall of the value of the cedi.
Some local investors have moved away from the stock market but frustrated foreign investors are ready to make a good business as interest rates start dropping.
In early August the interest rate was at 45.68 percent but it dropped to 41.38 percent in the second week of September.
In dollar terms, the Ghana Stock Exchange fell by 16.5 percent this year and the exchange in the Ivory Coast fell by 19.7 percent.
The Nairobi Stock Exchange also fell by 13.5 while the Johannesburg Stock Exchange, the biggest in Africa, also fell by about 27 percent. – (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)