The African Development Bank Group Chief Economist Complex

Market Brief
Volume2, Issue 6 26 February, 2011 1. 1.1

Africa Economic & Financial Brief

For the period 14 February 18 February, 2011
Market Commentary Stock Markets been drifting higher and has been the main driver for buoying the stock market. Tunisia: The stock market slipped by 2.2% over the week reflecting negative investors sentiment. The decrease in equity prices was driven by banking shares which are subject to concerns that banks may hold bad loans from the expresidential family. Kenya: The Index extended its previous weeks moderate losses of 1.4% by another 1.3% drop over the week, undermined by the recent political confrontation regarding the nomination process for top judicial posts. 1.2 Commodity Markets

Contents:
1. Market Commentary 1.1 Stock Markets 1.2 Commodity Markets 1.3 Exchange Rates 2. Regional Developments 3. Countries in Focus 4. Summary

During the week of 14 February 18 February 2011, global equity markets advanced on the back of positive economic indicators and the agreement reached at the G-20 meeting of finance ministers in Paris. The US Dow Jones index closed the week with 1.0% gains driven by improving corporate earnings and manufacturing data and continuing efforts of G-20 countries to tackle global imbalances. However, most African bourses closed weaker. The reviewed African stock markets, except that of Uganda, remained in negative territory during the week. The largest loss was registered in Tunisia (2.2%), followed by Kenya (1.4%), South Africa (1.3%) and Morocco (1.2%). Also, Ghana, Mauritius, and Nigeria posted minor losses of between 0.1 and 0.2%. On the other hand, Ugandas stock market continued its rally from the previous week recording gains of 1.3%. Cte d'Ivoires index remained unchanged over the week. The market in Egypt continued to be closed for the week. Equity Focus

Coffee: Alongside most other commodity prices, the price of coffee in the international market continued its rally. The price of Arabica coffee increased by 7.5%, while that of Robusta coffee rose by 3.5% over the week, mostly driven by limited supplies due to bad weather and increasing speculative buying. The year to date changes in coffee prices of Arabica and Robusta up to the end of the week amounted to 21.6% and 12.0%, respectively. Crude Oil (Brent): Crude oil prices rebounded marginally by 0.7% amid unrest in Libya.

Mthuli Ncube m.ncube@afdb.org +216 7110 2062 Charles Leyeka Lufumpa c.lufumpa@afdb.org +216 7110 2175 Dsir Vencatachellum d.vencatachellum@afdb.org +216 7110 2205

Uganda: The All Share Index climbed for the second consecutive week, rising by 1.3%, mostly on the back of the price and trading volumes surge of Bank of Baroda. Since news of a 150% stock dividend was released, Bank of Barodas stock price has

Prepared by the following staff: Jiyoung Choi (j.i.choi@afdb.org , Tel 216 7110 2464); Anouar
Chaouch (a.chaouch@afdb.org , Tel +216 7110 3989); Peter Walkenhorst (p.walkenhorst@afdb.org ,Tel +216 7110 2193), Manager, Research Partnerships Division, supervised the work. The Brief draws upon information from Reuters and Bloomberg.

Africa Economic & Financial Brief: 14 February-18 February 2011

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Gold & Silver: Precious metals ended higher, boosted by US CPI data triggering worries over inflation and investors inclination towards seeking safe-haven assets. The price of gold rose by 1.4%, while that of silver shot up 6.5% over the week.

Moreover, EAC and the Government of Finland signed a grant agreement worth 2 million Euros aiming at support of activities concerning the Lake Vitoria Basin during the period 2011-14.

3. 1.3 Exchange Rates Following the previous week, the majority of African currencies depreciated against the U.S. dollar alongside the Euro. The Euro recorded 1.2% drop against the U.S. dollar, as investors turned their interests towards safe-haven assets, notably the U.S. dollar, s the unrest in the Middle East and North Africa continued. Twenty two African currencies under review, including the CFA Franc, depreciated vis--vis the U.S. dollar. The highest deprecation of 2.5% was recorded by the Gambian Dalasi. Moderate losses between 1.1% and 1.6% were posted by the currencies of Malawi, Mauritania, So Tom & Prncipe, Sudan and Uganda. In contrast, eleven currencies appreciated with the largest gain of 2.0% being recorded by the Leone (Sierra Leone) followed by the New Metical (Mozambique), which registered a 1.9% appreciation.

Countries in Focus

The cocoa industry in Cte dIvoire has been slowing partly due to EU and US sanctions on cocoa shipping.

Cte dIvoire: The cocoa industry in Cte dIvoire has been slowing, partly due to EU and US sanctions on cocoa shipping. In this situation, the cocoa regulator stated about 0.3 million tonnes of cocoa were left in farming areas. The regulator also said it would collect export taxes from cocoa companies even though cocoa exports are under sanctions. Egypt: The Central Bank expects economic growth for the fiscal year ending June 2011 to be between 3 and 3.5%. Initially, the government had projected the growth rate to amount to up to 6.2%. The central bank stated that the greatest damages to the economy would be in tourism undermined by the unrest in Egypt, while the damages to Suez Canal revenues would not be higher. According to the Central Agency for Public Mobilization & Statistics (CAPMAS), the government statistics agency, the political unrest in Egypt has led to income losses in tourism, construction and manufacturing, amounting to 10 billion Egyptian pounds. Ethiopia: The annual inflation rate rose to 17.7% y/y in January from 14.5% in December on the back of rising food prices. Price caps on essential foods have been put into place in order to curb trading behavior that inflates food prices. The government stated that if the price caps fail to prevent the price from rising, it would start directly supplying items to the market at fixed prices.

The Central Bank of Egypt expects economic growth to be lower than earlier projected

2.

Regional Developments

Africa: According to South Africas Standard Bank Group, compared to 2009, Chinas investment in Africa is projected to increase by 70% to $50 billion by 2015. Meanwhile, Standard Bank also forecasts that bilateral trade between China and Africa will amount to up to $300 billion by 2015, doubling the 2010 level. East Africa: Representatives from the East African Community visited the Lake Victoria Basin Commission (LVBC) to be informed about the operation of LVBC. LVBC has been in charge of coordinating the sustainable development agenda of the Lake Victoria Basin, which is a driver for economic growth in east African countries.

Africa Economic & Financial Brief: 14 February-18 February 2011

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Ghana: The Monetary Policy Committee announced that its prime rate would remain unchanged at 13.5%, citing inflation risk. This is the third pause of trimming the rates which began in November 2009 with a 500 basis points cut in total to date. Mauritius: Tourism revenues rose by 10.5% in 2010 boosted by a spike in visitor arrivals. According to the Bank of Mauritius revenues reached 39.45 billion rupees, representing 10% of GDP. Visitor arrivals increased by 7.3% last year to 934,827, with European tourists accounting for around two-thirds of total arrivals. Pursuant to the previous years sentiment, visitor arrivals in January rose by 10.9% compared to January of 2010 year. Zambia: The Zambian economy grew by 7.1% in 2010 exceeding the 6.6% of the governments earlier forecast. The stronger growth performance is mainly due to higher investment in the mining sector. Zimbabwe: Annual inflation rate rose by 3.3% y/y in January compared to 3.2% in December.

Mauritius tourism revenues rose by 10.5% in 2010 boosted by a spike in visitor arrivals.

The Zambian economy grew by 7.1% in 2010, exceeding the governments initial forecast

4.

Summary

During the week of 14 February 18 February 2011, African stock markets closed with losses undermined by political unrest in the Middle East and North Africa. Most African currencies depreciated against the US dollars along with the Euro. Most commodity prices continued their rally over the week, notably coffee prices. The inflation rates for January in some African countries showed an upward trend, mainly due to high food prices.

Africa Economic & Financial Brief: 14 February-18 February 2011

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Appendix Table 1: Stock market movements Week ending on 18 February, 2011

Stock Markets Weekly % change ( 18-02-2011)

Week under review Previous week

Region/Country

Index Name

Index Code

Market Capitalization (USD, million) (18-02-2011)

Year-todate % Change
Dec 31 Feb 18

Cte d'Ivoire Egypt* Ghana Kenya Mauritius Morocco Nigeria South Africa Tunisia Uganda* Others USA France Japan

BRVM Composite Index CASE 30 Index Ghana All Share Nairobi SE Index- NSE 20 Mauritius All Shares Casa All Share Index NGSE All Share Index All Share Index Tunis se Tnse Index STK Uganda SE All Share index Dow Jones Industrial CAC 40 Index Nikkei 225 Index

BRVM CI CASE30 GSE NSE 20 SEMDEX MASI NGSE JALSH TUNINDEX USE DJ Index CAC40 N225

5,509 CLOSED 12,855 15,040 185,539 128,845 7,873,092 5,378,314 3,660 5,204.7 3,870,561 758,757 222,798,080

0.00 -0.20 -1.38 -0.13 -1.15 -0.17 -1.34 -2.19 1.30 0.96 1.36 2.24

0.49 0.24 -1.43 1.74 1.72 -0.30 0.16 0.44 2.49 1.50 1.34 0.59

15.9 4.3 -3.7 4.7 -0.2 7.5 1.2 -12.0 3.4 7.0 9.3 6.0

* Value at end of 17/2/2011

Africa Economic & Financial Brief: 14 February-18 February 2011

Appendix Table 2: Exchange rate movements Week ending on 18 February, 2011

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Exchange Rates (currency per US$) Currency Code Weekly % change Week under review Africa Algeria Angola Botswana Burundi Cape Verde Comoros Congo. Dem. Rep. of Djibouti Egypt Ethiopia Gambia. The Ghana Guinea Kenya Liberia Libya Madagascar Malawi Mauritania Mauritius Morocco Mozambique Nigeria Rwanda So Tom & Prncipe Seychelles Sierra Leone Somalia South Africa Sudan Tanzania Tunisia Uganda Zambia CFA zone Countries* Others Europe Japan Algerian Dinar New Kwanza Pula Burundi Franc Escudo Comoros Franc Congolese Franc Djibouti Franc Egyptian Pound Birr Gambian Dalasi New Cedi Guinea Franc Kenyan Shilling Liberian Dollar Libyan Dinar Ariary Kwacha Ouguiya Mauritius Rupee Dirham New Metical Naira Rwandan Franc Dobra Seychelles Rupee Leone Somali Shilling Rand Sudanese Pound Tanzanian Shilling Tunisian Dinar Uganda Shilling Zambian Kwacha CFA Franc Euro Yen DZD AON BWP BIF CVE KMF CDF DJF EGP ETB GMD GHS GNF KES LRD LYD MGA MWK MRO MUR MAD MZN NGN RWF STD SCR SLL SOS ZAR SDG TZS TND UGX ZMK XOF EUR JPY -0.46 -0.03 0.20 -0.17 -0.23 -0.80 -0.56 0.08 0.11 0.02 -2.49 0.83 0.14 -0.28 0.69 -0.25 0.85 -1.37 -1.58 -0.20 -0.15 1.91 -0.31 0.00 -1.12 -0.04 1.96 0.11 0.32 -1.17 -0.12 -0.38 -1.30 -0.03 -0.60 -1.24 -2.24 -0.16 0.03 -1.22 0.32 -1.31 0.67 0.51 -0.17 -0.46 -0.19 3.80 3.37 0.00 -1.05 0.00 -1.09 0.32 0.25 -0.55 -0.39 -0.47 0.16 -0.11 -0.08 -0.36 -0.14 1.81 -0.60 -0.73 -2.83 -0.06 -0.48 -1.68 0.69 -1.03 0.29 1.13 1.2 -0.7 -5.0 -0.6 1.8 2.4 -2.7 0.7 -1.3 -0.6 3.6 -1.9 -6.9 -2.0 -0.7 0.2 6.2 -1.7 -1.3 3.2 2.1 3.8 -1.1 -1.8 2.3 -0.6 1.0 -0.3 -8.1 -5.1 -1.5 1.4 -2.4 2.2 2.2 -5.3 10.4 ( 18-02-2011) Previous week Year-to-date % Change Dec 31 Feb 18

Region/Country

Currency Name

Source: AfDB Statistics Department, February 2011 * : in the interbank currency market