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The East African : December 9th 2013
60 DECEMBER 7-13,2013 BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 5,005.45 -1.87% (CUMULATIVE MOVEMENT) DSE All Share Index Tanzania 1,880.29 -3.10% USE All Share Index Uganda 1,575.00 -2.11% JSE All Share Index South Africa 44,471.68 -1.07% NGSE All Share Index 38,867.78 Nigeria - -0.10% EGX Share Index Egypt 6,332.13 2.39% Bank on Friday said foreign investors are increasingly cautious about investing in developing countries in the face of continued global economic and political turbulence. The bank said macroeco- nomic instability and political risk rank neck-and-neck as top concerns for investors as they plan over the short and medium terms. That may not be good news for East African countries planning to issue bonds on the international market. Recently, the conditions for investment have been relatively favourable, especially following a September decision by the US Federal Reserve Bank to continue with its monetary stimulus plan. Following the announce- ment, long-term interest rates fell in the US and Europe, as short-term rates stabilised, potentially making it more profitable for investors to put their money in frontier and emerging economies like Kenya and Tanzania. The two countries have been preparing to sell debt in international markets, but yields on debt issued recently by other African countries have been on an upward trend. The projection by the World Bank comes at a time when foreign ownership of shares at the Why fo≥eign investo≥s a≥e cautious about EA N ot so good news for the East African region: The World for example, ranks 141 out of the 186 countries surveyed on property rights, 142 on intellectual property protection, 141 on property rights and 41 on investor relations. Kenya is ranked at position 60 in judicial independence, 102 in police reliability and 86 in property rights protection. Rwanda ranks at position 29 in property protection, 33 in judicial independence and 17 in legal efficiency in disputes resolution. As Rwanda has proven, there is a strong link between investor protection and the attraction of a country as an investment destination. Over the past decade, the At the NSE: Foreign ownership of shares has shot to a seven-year high. Picture: File Nairobi Securities Exchange (NSE) has shot to a seven-year high, totalling nearly a quarter of market value, reflecting renewed international investors’ confidence in Kenya’s economic prospects. New stockmarket data shows foreign investors were holding 22.4 per cent shares as at the end of September, a level close to the 2006 peak of 25.6 per cent. But there are more reasons why foreign investors are getting edgy about the developing economies. The World Bank said rising cases of breach of contract and regulatory risks top investors’ risk concerns. It seems investors want reassurance that their investments are protected. The findings should trouble the region. In the World Bank competitive index released early this year, the EAC member states have performed dismally on these parameters. Burundi, The WB said rising cases of breach of contract, regulatory risks top investors’ risk concerns. country has formed an ad hoc committee to look at ways on easing the business environment in the country using the bottlenecks highlighted by the World Bank report as a reference point. With the increased intercon- nection between states, the battle for investment is now global. Investors no longer evaluate whether to set up shop in Kenya or Burundi; rather both countries, and indeed the entire region, are competing against countries like Vietnam. Despite this, the survey found that nearly half of the respondents expect to increase their investments in developing countries over the next 12 months. Gloom as Uganda’s cu≥≥ent deficit slips to $728.6m DO NOT blame Ugandan policy makers for looking gloomy. They have a good reason. Whereas the country was supposed to reduce its imports in the three months to September, its exports took a beating, pushing its current account deficit further into the red. The country’s current deficit worsened during the third quarter of 2013, deteriorating to $728.6 million, from the $578.6 million posted in the preceding three months. Bank of Uganda executive director for research Adam Mugume cited higher deficit in trade, income and services, coupled with lower current transfers. Even though the import bill declined by 4.8 per cent quarter-on-quarter, it still remained high at $1.239 billion between August and October. This was down from the $1.3 billion between May and July. The trade deficit deteriorated by 5.7 per cent, from $533 million in the three months to July to $564 million in the three months to October on account of lower export earnings, largely due to a reduction in coffee, cotton, tea, fish and flower export volumes. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories Kigali’s new $34m skyline KIGALI’S SKYLINE should get ready for a new signature. Fusion, the regional private equity firm, jointly with local property developer Kigali Heights Development, plans to construct a $34 million mixeduse development in the capital. The 30,000-square metre du- al-tower office and retail block is expected to host regional retail shops and supermarkets. The development is welcome in a region that, though having a huge demand for high-end commercial space, is grossly undersupplied. Indeed, take aside any top honcho of the big regional retail chains and ask them what the biggest challenge to their growth is and they will likely cite the unavailability of suitable buildings. Fusion’s investments include hotel chains that will help drive the country’s quest to become one of the top conferencing centres on the continent.
December 2nd 2013
December 16th 2013