News & Publications

Africa Market and Lombard Fund News

February 2018

16 Mar 2018

Dear Investors

February has ended. This shortest month of the year was all about South Africa.


South Africa

It is a new era for South Africa. Out with president Zuma and In with President Ramaphosa who pledges to reinforce South Africa’s economy and rebuild confidence. It is fair to say that investors believes that the new president is up to the task. On his first day in office the benchmark JSE Top-40 index rose 3.7% while the broader All-share index gained 3.5%, as markets in Africa’s most sophisticated economy gained ground and this was echoed by the fund also as good gains were experienced on the back of the change in government and the ZAR held its gains. The fund has increased positions in diversified industrials to profit from the renewed positive market sentiment


The fund support of Egypt is paying off well. The economy continues to improve and interest rates were cut by 1% on the back of better inflation data. All the good news translated into a 13% gain in Egyptian equities over the month.


With oil prices appearing to stabilise, the Nigerian Government is feeling more secure about consistent oil revenue and as a result, Nigeria has issued $2.5bn of Eurobonds this week. The idea is to lower the burden of the more expensive domestic debt. We expect Kenya to follow soon.

The much-anticipated listing of MTN Nigeria is finally underway. We are waiting for final regulator approval, but we should witness one of the larger listings to take place in Nigeria, happen before the end of June. The company has 60 million clients in Nigeria and we are keen participants (depending on pricing) Which will be good for the fund.


According to the Kenyan Finance Minister, the economy is expected to grow 5.8% this year, recovering from drought and political uncertainty that impacted growth in 2017. The budget deficit is projected to decrease to 6% of GDP in the next financial year, and to 3% by 2022.

Moody’s views Kenyan commercial banks risks to have increased due to the countries sovereign credit profile. As the commercial banks has elevated balance sheet exposure to the sovereign, the rating agency has reduced their rating. However, African banks are starting to look attractive and we consider it nearly time to reconsider our underweight position in sub-Saharan banks.


All in all, things are on the up and slowly gaining positive momentum. Looking forward to our next communication and an even better 2018.


Derek Seely

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