By March 26, 2020

How Major Stock Exchanges In Africa Are Reacting To The Coronavirus Pandemic

By March 26, 2020

The global pandemic known as coronavirus is spreading rapidly and wreaking havoc on anything it its path. African currencies are taking a hit, economies are being shaken and businesses can only remain hopeful. However, COVID-19 is also eating its way into stock exchange(s) in Africa.

Johannesburg Stock Exchange (JSE)

First off, the JSE is one of the few organizations that remain open during the 21-day coronavirus lockdown in South Africa. This exemption might be for the best, given that the exchange had already been walking on thin ice.

As of now, 90 percent of JSE staff are working from home, but the essential individuals will be going to the office. Asides from that, investors are tending to prefer and opt for companies that have high cash balances at this stage.

As of early this month, stocks on the exchange were plunging, a result of the hike in oil prices and the fears arising from the rapid spread of COVID-19. There were widespread losses on the JSE, with the all-share index losing more than 5 percent.

Nevertheless, JSE, which is the biggest in Africa by market cap, appears unwilling to make drastic decisions. It decided against shortening trading hours after consulting with market players. So trading continues as usual.

Nigerian Stock Exchange (NSE)

With a market cap of USD 44 Bn, the NSE is one of the most developed in Africa. It has not been exempted from the COVID-19 scare, as almost 3 in every 4 transactions were closed at premium as of Wednesday. That was when the market went on remote trading, after it shut down its trading floors in response to the pandemic.

Things seemed hopeful when the exchange had 20 advancers to 7 decliners. But the underlying resilience was debunked by losses recorded by two large-cap stocks. Total Nigeria and MTN Communications Nigeria lost enough to drag the NSE under.

The NSE will be closed for the next 30 days to inhibit the spread of COVID-19. But, there is still much work to be done as its opening aggregate market value of NGN 11.324 Tn (above USD 30 Bn) dropped to about NGN 11.330 Tn.

The All Share Index (ASI)—the value-based index that tracks all share prices at the exchange—declined from its opening index of 21,741.16 points to close at 21,729.48 points.

Nairobi Securities Exchange (NSE)

The last time the Nairobi Stock Exchange was at such a low level was 2003. It hit this 7-year low on Monday (March 23) when foreign investors depended on their withdrawals from the equities market due to the COVID-10 panic.

As it is, the outbreak has cut shareholder wealth by KES 458 Bn in a month at the Kenya bourse. The benchmark NSE 20 Share Index—which captures the movement of select blue chip stocks like Safaricom, East African Breweries Limited (EABL)—closed at 1,958.5 points after shedding 66.75 points.

Investors are rushing for government bonds, away from the volatile stock markets. About a week ago, trading on the exchange was suspended towards the close of the market because panicky investors made share sales indiscriminately. The total market cap dropped by KES 120 Bn (USD 1.1 Bn)—one of the largest declines in a single day in the history of the bourse.

The last time such a drop happened, it closed at 1,948.5 points. As of then, Kenya was at the start of Mwai Kibaki’s administration. The occurrence, nonetheless, had links with the country’s economic resurgence and a stock market boom.

Egyptian Stock Exchange (EGX)

At the beginning of the month, the EGX’s stock indexes fell during a sales session by Egyptian and Arab investors, right after the rise of COVID-19 cases was announced. As such, market cap went down by about LE 31 Bn (USD 1.9 Bn) and closed at LE 596 Bn (above USD 37 Bn).

The lowest level is about three years, the main index of the exchange, EGX30, went down by some 7 percent to 11,000 points. The EGX50 index fell 5.3 percent to close at 1,546 points, and the EGX100 index fell 7 percent to close at 1,175 points.

Shares for 5 companies listed on the stock exchange went up by the end of trading on Monday, March 9th, while the shares of 135 companies declined and 29 companies remained stable.

Nonetheless, President Abdel Fattah al-Sisi said his administration would allocate LE 20 Bn (USD 1.27 Bn) to support the stock exchange in order to soften the effects of the pandemic on the North African country’s economy.

Meanwhile

The Casablanca Stock Exchange in Morocco achieves one of the best performances in the region of the Middle East and North Africa. It is also Africa’s third largest Bourse after Johannesburg Stock Exchange and Nigerian Stock Exchange.

The exchange had its fair COVID-19 share and plunged into an unprecedented panic, recording the biggest decline in its history at the end of Monday, March 9. The Moroccan All Shares Index (MASI) lost 5.82 percent of value on Monday alone, reaching an all-time low of 10,806 points.

Featured Image: Wall Street Journal