Global anomalies pressurise Nam markets
Old Mutual Investment Group South Africa macro-solutions senior economist, Johann Els says the 2012 second economic quarter could still be affected by the Euro-zone instability as well as the slow recovery of the US markets.
Speaking during the Old Mutual stakeholders’ engagement breakfast held in Windhoek recently, Els pointed out that although the global equity markets in the first quarter of had lifted investors’ hopes for a positive year ahead; the sentiment might be changing in the second quarter.
“This serves as a reminder to local investors that we cannot escape the impact of global events. Indeed, all our financial markets (rand, bonds and equities) remain in the shadow of developments in the Euro-zone, the US and China, despite a mildly positive outlook for the South African economy,” Els said.
The Bank of Namibia’s quarterly report for the first quarter ending March explains that most emerging economies have been slowed down due to the backdrop of restrained growth in the advanced economies.
“Growth in China, India, Brazil and South Africa was subdued, while it improved slightly in Russia. The real GDP growth in South Africa moderated to 2.1% from 2.9% quarter-on-quarter, during the review period.
“This was owed to weakness emanating mainly from a contraction in mining production,” notes BoN in their report.
The NSX monthly market from April to June shows an unstable performance of the different equities listed on the local bourse.
Old Mutual Plc shares have been a little stable in this past quarter from April as shown in the NSX report.
Its market capitalisation by total shares in issues stood at N$90 847, going down at N$90 701 in May then upgraded to N$94 987 in June.
In June, its current price share was at N$18.62 from N$18.65 in May and a high of N$19.48 in April.
A company like Namibian Breweries Limited (NBL) has been showing improvement though.
In April, its share price stood at N$12.03 through to the month of June whereby its share price went up to N$12.16. This was also visible in its market capitalisation by total shares that stood at N$2485 from April to June at N$2511.
Financial institutions have also shown subdued performance, although they are looking up in the June NSX report.
FNB Holdings, which was recently awarded the best banking group, had its share price at N$14.75 in April, down to N$14.56 in May, yet improved to N$14.66 in June.
Nedbank Group Ltd showed the same trends from N$169.36 in April, downgrading to N$164 50 in May then up to N$173.89 in June.
In the food and drug retailers, Shoprite Holdings improved throughout April to June. In April, the share price stood at N$134.40, up to N$137.83 in May and improved in June to N$150.67.
The mining sector, on the other hand, had been showing a slight decline, with Paladin Energy Ltd’s share price pegged at N$13.11 in April, going down to N$10.69 in May and then to N$9.74 in June.
B2Gold, listed on the NSX in May, started with a price share of N$26.76 before going down to N$23.18 in June.
The central bank stated, in its first quarterly bulletin ended March, that mining had been displaying a mixed performance with the production of zinc and diamond concentrate declining on a quarterly and yearly basis while uranium and gold had increased.
Another company that has shown instability in its share price is the Anglo American Plc that stood at N$300.40 in April down to N$257.59 in May, only to pick up again at N$271.30 in June.
BoN’s quarterly report added that although the Namibian economy continued growing at a slow pace during the first quarter of 2012, the outlook remains on the downside.
“Risks to the outlook remain on the downside, mainly due to the depressed global demand resultant from high unemployment rates, the Euro-debt crisis and inflationary pressures emanating from rising international food and crude oil prices. This may result in reduced demand for commodities, thus diminishing country’s export earnings,” the report noted.