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Kenya’s bourse scales back its derivatives ambitions

29 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters Like

NAIROBI (Reuters) – Kenya’s Nairobi Securities Exchange will launch trading of derivatives by the end of 2016, after a series of delays, but plans to start with fewer instruments than originally planned, its chief executive said.

The bourse, which is a key entry point for foreign funds looking for exposure to fast-growing East Africa economies, initially planned to roll out trading in the first half of last year with more products including currency futures.

“We are now at a very close point. Certainly this year we should be able to get the market up,” Geoffrey Odundo told Reuters in his office on Wednesday.

Trading would start with a futures contract on the NSE-25 share index, a tool used to hedge investment risk. Trading in single stock futures and currency futures, originally expected to start at the same time, would begin at a date still to be determined, he said.

Odundo attributed the delays in launch of trading to the slower-than-expected pace in setting up the infrastructure to trade derivatives and educate the market about its benefits.

Kenya will be the second in Sub-Saharan Africa to start trading of derivatives after South Africa, he said.

“Futures contracts are a bit sophisticated. It is not like spot trading. You really have to know what you are trading,” Odundo said.

DIVERSE ECONOMY

The NSE is also considering the possibility of offering agriculture contracts, once the derivatives market takes off, but those plans were at an embryonic stage, he said.

He said the recent commodity price drop had curbed equity trading volumes at the bourse this year, with daily volume averaging $3-4 million, half of the daily levels seen at the same time last year.

But Kenya’s diverse economy, which does not rely on a particular commodity, has helped the situation a little, he added.

“Our decline has not been as rapid as the other markets which have got commodity trades like Nigeria and Angola,” he said about volumes, without offering details.

Valuations of listed firms, as measured by price to earnings ratio, had however fallen, which together with a stable currency, could boost interest among foreigners.

“Most of them are at 8-10 (PE ratio) and historically they have been as high as 15. These are good entry points for them,” Odundo said.

On the other hand the bond market was booming, with monthly volumes more than doubling last month from the same period last year, and on course to more than triple in June, thanks to falling yields on government debt.

The yield on the benchmark 91-day Treasury bill has fallen by more than 300 basis points in recent weeks.

(By Duncan Miriri. Editing by Edmund Blair and Gareth Jones)

Ugandan shilling steady as commercial banks’ panic buying slows

29 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters 1

KAMPALA (Reuters) – The Ugandan shilling was stable on Wednesday as a recent panic purchase of dollars by commercial banks subsided after a central bank intervention on the sell side earlier in the week and subdued demand among corporate clients.

At 1002 GMT commercial banks quoted the shilling at 3,400/3,410, little changed from Tuesday’s close of 3,405/3,415.

(Reporting by Elias Biryabarema; Editing by George Obulutsa)

South Africa’s slowing growth to be hit by Brexit: Reserve Bank governor

29 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters Like

JOHANNESBURG (Reuters) – The governor of the South African Reserve Bank said on Tuesday that although the decision by Britain to exit the European Union would not cause a recession, already slowing economic growth would be hit.

Speaking to Bloomberg TV in Portugal Lesetja Kganyago said: “We would not venture into a recession at this stage, but there is no doubt that it will slow the South African economy from the weak growth that we already have.”

Finance Minister Pravin Gordhan said on Sunday financial market volatility caused by Britain’s decision to quit the EU, which sent the rand tumbling, could hurt investment flows into South Africa.

Britain voted last week in a referendum to leave the EU, wiping billions of dollars off world equity markets.

“It has affected sentiment and investors were looking for safe assets. We are not seen as one of the safe assets,” Kganyago said.

South Africa’s economy is barely growing, hobbled by power cuts last year, low commodity prices, drought and political ructions that have unnerved investors.

Africa’s most advanced economy contracted in the first quarter, putting it on track for its first recession in seven years.

(Reporting by Zandi Shabalala)

Tanzania sees economic growth picking up to 7.4% in 2017

28 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters Like

DAR ES SALAAM (Reuters) – Tanzania’s central bank said on Tuesday it expects economic growth to accelerate to 7.4 percent in 2017 from an estimated 7.2 percent this year, driven by construction, communications and finance.

The Tanzanian economy, East Africa’s second-biggest, grew 7 percent last year.

“The macroeconomic objectives of the government aim at achieving a real gross domestic product growth of 7.3 percent in 2016/17 based on the projected growth of 7.2 percent in 2016 and 7.4 percent in 2017, while maintaining inflation at single digits,” the Bank of Tanzania said in its latest monetary policy statement.

“The bank will continue pursuing prudent monetary policy in 2016/17 to keep inflation close to the medium-term target of 5 percent, while ensuring that the liquidity level is consistent with demands of various economic activities.”

Tanzania’s year-on-year headline inflation rate edged up to 5.2 percent in May from 5.1 percent in April, as prices rose for non-food items.

The government said it plans to increase spending by 31 percent in its 2016/17 fiscal year to $13.51 billion to finance infrastructure and industrial projects.

(Reporting by Fumbuka Ng’wanakilala; Editing by George Obulutsa, Larry King)

Tunisia central bank holds key interest rate unchanged at 4.25 percent

28 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters Like

TUNIS (Reuters) – Tunisia’s central bank has kept its key interest rate unchanged at 4.25 percent, an official in the bank said on Tuesday.

The bank last cut its main interest rate in October from 4.75 percent, in a bid to boost economic growth as inflation fell.

(Reporting By Tarek Amara; Editing by Janet Lawrence)

Old Mutual says could dual-list wealth, emerging markets units

28 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters Like

LONDON (Reuters) – Old Mutual said on Tuesday its preferred option after splitting into four would be to have two of the new companies listed on both the London and Johannesburg stock exchanges.

The Anglo-South African company expects to complete its restructuring by the end of 2018.

The changes include carving out its emerging markets operations to create a new South African holding company and a company that would mainly comprise the group’s wealth operations.

Chief Executive Bruce Hemphill said the firm had also received approaches for its businesses from industry and private equity players.

“We are still going through a process,” he told Reuters by phone. “We have settled on a preferred route, (but) that does not preclude the possibility of someone coming along with an offer.”

Old Mutual Wealth was valued by analysts earlier in the year at 3-4 billion pounds ($4.01-$5.35 billion).

Hemphill said despite recent market fluctuations following last week’s referendum vote for Britain to leave the European Union, Britain was still a “sure bet” in the longer term.

He declined to comment on the sale of Old Mutual Wealth’s Italian unit, which has attracted four private equity bidders in its final stages, sources told Reuters last week.

But he said Old Mutual was going through a process of “cleaning up” the Italian wealth business.

The firm said it plans to distribute a “significant proportion” of its stake in Nedbank Group Ltd to the shareholders of the new South African holding company.

The FTSE 100-listed company also said it plans to continue cutting its 65.8 percent stake in U.S. asset management firm OMAM.

Old Mutual said it faces headwinds from weakness in the South African rand and from lower equity markets, but said gross sales in the year had been strong.

Old Mutual shares were up 4.6 percent to 186.3 pence at 0826 GMT in line with a bounce in financial stocks following a severe sell-off this week.

Old Mutual will hold its annual general meeting on Wednesday, along with an extraordinary general meeting where shareholders will vote on Hemphill’s proposed 1,000 percent bonus.

($1 = 0.7483 pounds)

(By Noor Zainab Hussain and Carolyn Cohn. Reporting by Noor Zainab Hussain in Bengaluru; editing by Sunil Nair and Jason Neely)

Egypt could secure $10 bln loan from IMF: central bank

27 June 2016 Comments (0) Business, Latest Updates from Reuters, Middle East Like

By Ehab Farouk

CAIRO (Reuters) – Egypt’s central bank said on Monday it could secure some $10 billion from the International Monetary Fund (IMF) by agreeing a structural reform programme but has yet to make any formal request to do so.

Talks over a possible loan half that size have faltered in the past and analysts say an IMF deal might require reforms that the government could find politically difficult to implement in a country where tens of millions live hand to mouth.

The central bank statement came in response to comments by a cabinet minister, who told Reuters on Monday that Egypt had started negotiations with the IMF last week for a $5 billion loan. The minister said the central bank was leading the talks.

“There is a delegation from the IMF that might visit Egypt next month to continue the negotiations,” the minister, who holds an economic portfolio, said by telephone.

The central bank said in a statement that while it had not formally made a request to negotiate a structural reform programme, it was in constant contact with the IMF and could secure $10 billion should it opt to apply.

“The numbers mentioned are incorrect. If there was a need to request a reform programme, Egypt would be capable of obtaining twice the figures mentioned,” the statement said.

The IMF said that its officials “maintain close dialogue with the Egyptian authorities” and that the lender stood ready to help should Egypt make a financing request.

“The size of any financial arrangement would depend on Egypt’s financing needs and on the strength of its economic program,” IMF Mission Chief for Egypt, Chris Jarvis, told Reuters in emailed comments.

Egypt’s economy has been struggling since a mass uprising in 2011 ushered in political instability which drove away tourists and foreign investors, major foreign currency earners. Reserves have halved to about $17.5 billion since then.

The dollar shortage has forced Egypt to introduce capital controls that have hit trade and growth.

The central bank said in its statement Egypt was pushing ahead with its existing reform programme, which includes plans for Value Added Tax (VAT) and subsidy cuts which were put on hold when global oil prices dropped.

A VAT bill is in its final stages but could face resistance in parliament on concerns over inflation that has hit seven-year highs since the currency was devalued by 13 percent in March.

Egypt’s reform programme formed the basis of a $3 billion three-year loan deal with the World Bank that was signed in December. But the cash has yet to be disbursed as the World Bank waits for parliament to ratify economic reforms including VAT.

“Egypt will have to proceed with some painful reforms to guarantee that the loan will work this time,” CI Capital economist, Hany Farahat, said.

“We still haven’t approved the FY16/17 budget, or the VAT. We need another devaluation round for the Egyptian pound … we need the investment environment to be reformed and capital controls to be eased for foreign investors.”

(Additional reporting by Lin Noueihed; Writing by Asma Alsharif and Lin Noueihed; Editing by Louise Ireland)

Nigeria’s central bank intervening in currency market: traders

27 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters Like

LAGOS (Reuters) – Nigeria’s central bank asked for bid-offer quotes from currency traders on Monday as it sold dollars on the interbank market to boost liquidity, traders said.

After abandoning the naira’s 16-month old exchange rate peg a week ago, the central bank sold dollars at an auction to clear a backlog of demand and keep markets active.

Currency traders said they had tightened the differential between bids and offers to 0.5 naira from one naira set when the currency was floated last week.

(Reporting by Chijioke Ohuocha; Editing by Catherine Evans)

Egypt’s Beltone files lawsuit against heads of bourse and watchdog

26 June 2016 Comments (0) Business, Latest Updates from Reuters, Middle East Like

CAIRO (Reuters) – Egypt’s Beltone Financial has filed a lawsuit against the heads of the Cairo stock exchange and Financial Supervisory Authority over the repeated cancellation of trades on its stock, according to two sources and a court document seen by Reuters.

Shares in asset manager Beltone jumped by more than 550 percent in three months after it was acquired by billionaire businessman Naguib Sawiris’s OTMT in November for 650 million Egyptian pounds ($73 million).

The price spike lifted Beltone’s market value to 4 billion pounds before the stock exchange, at the end of February, began to stop trades in the shares on an almost daily basis. The exchange referred to rules allowing such cancellations in cases where the head of the bourse considered that trades had taken place at unjustified prices.

Beltone’s share price stood at 7.34 pounds on Sunday, compared with 21.97 pounds in mid-April.

“Beltone filed a lawsuit before the Administrative Court against the head of Egypt’s stock exchange, in person, and against the chairman of the financial regulator,” said two sources who are close to the matter.

The lawsuit contests that the head of the stock exchange’s decisions were incorrect and an illegal abuse of authority.

The head of Egypt’s stock exchange, Mohamed Omran, was not immediately available for comment.

Sherif Samy, chairman of the Egyptian Financial Supervisory Authority, said that Beltone had filed a grievance with the regulator earlier this month.

“The decision of the commission did not come in its favour and that is why they are resorting to court, and that is the right of any party,” Samy said.

($1 = 8.8799 Egyptian pounds)

(Reporting by Ehab Farouk; Writing by Asma Alsharif; Editing by David Goodman)

South Africa’s rand recovers slightly, stocks down on Brexit

24 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters Like

JOHANNESBURG (Reuters) – South Africa’s rand recovered some its losses against the dollar after falling heavily on Friday as Britons voted to quit the European Union, stunning emerging markets currencies.

Stocks also suffered, but gold shares soared in tandem with the metal’s price which surged 8 percent to its highest in more than two years as demand for safe havens assets like bullion and silver rose after the shock vote to leave the EU.

Investors fear Brexit could spark anti-establishment movements in other European countries, some of which have seen decline in traditional political parties.

South African President Jacob Zuma said local banks and financial institutions could withstand the Brexit shock, as they did during the 2008/09 global financial crisis.

Finance Minister Pravin Gordhan said Treasury and the central bank would take measures to deal with any Brexit shocks to Africa’s most industrialised country, which has strong trade ties with the EU.

By 1200 GMT, the rand was 4.52 percent weaker at 15.0510 per dollar after tumbling more than 8 percent in early trade to a three-week trough of 15.6800. The rand closed at 14.4400 in the previous session.

Implied volatility on the rand jumped 16 percent to six-month highs in an already highly traded session.

Capilis Asset Managers head of forex Giacomo Bonavera said the rand decline was over done. “The sellers will come back in and bring the price back down,” he said.

Government bonds also weakened, with the yield on the benchmark instrument due in 2026 adding 25 basis points to 9.13 percent, having jumped as much as 28.5 basis points earlier.

On the bourse, the JSE securities exchange’s Top-40 blue chip index dropped 4 percent to 45,502 points, while the broader All-Share index slumped 3.7 percent to 51,579 points in line with global weakening of equities due to Brexit.

Most shares were in the red with exception of gold miners.

The biggest losers were real estate firms Capital & Counties Properties and Intu Properties, who both have interests in the United Kingdom, and fell 17 percent and 14 percent respectively.

Financial services firm Old Mutual, which has a primary listing in London, and food services firm Bidcorp, which makes nearly half its sales in Britain, fell 7 percent.

Anglogold topped the gainers on the bluechip index, soaring as much as 14.54 percent to 267 rand, while Sibanye Gold, Goldfields and Harmony also shone on the wider index, each rising more than 16 percent.

(Reporting by Mfuneko Toyana; Editing by James Macharia)

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