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Harare - Foreign investors seem to have suffered heavy losses in most stock markets in Africa amid concerns that the continent will not be able to meet its growth potential any time soon.
While some stock markets have managed to record gains in their local currencies, the same cannot be said when returns are analysed in US$ terms.
According to a weekly Africa report by African Alliance Capital Markets, stock markets such as the JSE in South Africa, the TUNIS in Tunisia, the BSE DCI in Botswana and the NSX in Namibia have managed to record gains in their local currencies but only Namibia and Botswana have recorded gains in US$ terms.
The JSE ALSI was down 7.46% in US$ terms as at 26 October 2015. This means foreign investors who had invested in Africa, seeking alpha, have not managed to get the expected returns, at least for now.
The situation for portfolio investors is even worse when we consider countries such as Zambia where investors have lost more than 50% year-to-date in US$ terms on the Lusaka Stock Exchange (LuSE ALSI).
Nigeria has also been bad for investors with the NIG All Share Index losing 20.47% year-to-date in US$ terms.
Kenya is close by with the FTSE NSE15 losing 24.94% year-to-date. Ghana and Egypt have dropped 25.73% and 23.66% respectively.
Other countries were investors have lost value on the stock markets in US$ terms include but are not limited to Uganda down 27.08%, Zimbabwe down 19.80%, Tanzania down 23.81%, and Rwanda down 32.05%.
There are a few bright spots though with Botswana having gained 0.91% while Namibia has gained 5.89%.
The losses in these African markets come at a time when doubts have been raised “about the accuracy of the heady statistics that lured hordes of investors during the Africa Rising boom years.
READ: Economic slowdown prompts scrutiny of African data
Investments in countries such as Nigeria were buoyed by “the boom” in oil revenues, but this has since changed after the price of oil tumbled from more than $100 per barrel to less than $50 at some point.
Economic prospects in Zambia are now dim after copper prices took a tumble resulting in some mines closing and retrenching workers.
This month, the price of copper hit a five-and-a-half-year low of about $5 353 a tonne, below the estimated marginal cost of production of $5 500.
To compound the situation local currencies have also added to the losses for foreign investors.
The Zambian kwacha has depreciated to record lows against the US dollar.
In South Africa, the rand dropped to record lows against both the dollar and the euro as concern grew that China’s weakening economy will deepen a rout in prices of commodities that South Africa exports and relies on for foreign exchange.
In September 2015 the Rand fell to as low 14.1588 against the dollar and 15.9708 to the euro.
