Weekly Investor Update (November-WeekThree-2024)

10 min Read November 15, 2024 at 5:00 PM UTC

Monday

Orange, BICICI Share Prices Hit Record Highs as BRVM Stays Bullish

The West African BRVM stock exchange closed last week on a bullish note, marking its fourth straight session of gains. Key indices saw positive movement, with the benchmark composite index rising 0.42% to 271.33 points, the BRVM 30 up 0.45% to 135.64 points, and the BRVM Prestige gaining 0.64% to reach 113.18 points.This upward trend was fueled by strong performances from shares of Sonatel (SNTS), up 0.44% at 23,705 FCFA, and Orange (ORAC) advancing 0.47% to 16,175 FCFA. BICICI (BICC) led the market in capitalization gains, rising 3% to 12,000 FCFA. Orange and BICICI stocks have reached their all-time highs.Top performers includedSMB(+5.72% at 11,000 FCFA),SOGB(+4.29% at 4,500 FCFA), andCIE(+3.10% at 2,325 FCFA). In contrast,Uniwax(-6.90% at 405 FCFA),Bernabé(-4.76% at 1,100 FCFA), andBOA BF(-2.73% at 3,210 FCFA) showed the weakest performances.

BRVM’s consistent weekly gains underscore positive investor sentiment, driven by robust performances from major players like Sonatel, Orange CI, and BICICI. Total transaction volume reached 586.75 million FCFA, down from 3.5 billion FCFA in the previous session. Orange CI, SIB, and Nestlé CI dominated trading, with transaction values of 94.76 million FCFA, 80.99 million FCFA, and 65.60 million FCFA, respectively. Despite a drop in total transaction volume compared to the previous session, the exchange’s steady upward trajectory highlights a strong market response to leading stocks reaching peak valuations.

African Energy Bank Set to Launch in Nigeria Next January

The African Energy Bank (AEB), a pan-African initiative led by the African Petroleum Producers Organization (APPO) and Afreximbank, is slated for launch on January 28, 2025.With headquarters in Abuja, Nigeria, AEB is designed to address the funding challenges faced by Africa’s energy sector, specifically oil and gas projects. The bank, with an initial capital of $5 billion, seeks to bridge the financing gap created by international investors pulling back from fossil fuels over climate concerns.Africa holds substantial energy resources, with over 125 billion barrels of oil and 600,000 billion cubic feet of gas. These resources are seen as critical for economic growth and energy access across the continent. The Nigerian government, committed to the project, has already made its capital contribution and prepared the headquarters building, expected to be ready by early next year.

The African Energy Bank’s launch marks a pivotal step toward African energy self-sufficiency, providing targeted financing for fossil fuel projects that are increasingly overlooked by global investors. With the bank headquartered in Nigeria, AEB aims to empower African nations to leverage their resources for economic development, reducing reliance on external financing and strengthening energy security across the continent. As Africa seeks to harness its vast oil and gas reserves, AEB represents a strategic tool for the continent’s energy independence, focusing on development-driven resource utilization amidst global climate finance shifts.

Bitcoin Hits New Record High of Over $81,000 On Trump’s Election Win

Bitcoin surged to a record $81,891, fueled by President-elect Donald Trump’s endorsement of digital assets and the election of pro-crypto lawmakers to Congress. Trump’s win across key battleground states and his pledge to centralize the US in the digital-asset industry sparked optimism among traders, pushing the largest cryptocurrency up 6.1% on Sunday and continuing its rally on Monday.Trump’s campaign promises included building a strategic Bitcoin stockpile and appointing crypto-friendly regulators, driving bullish sentiment. Bitcoin has risen about 94% this year, outpacing gains in stocks and gold. The demand has been further bolstered by the popularity of Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust, which recorded a $1.4 billion inflow last week.The former US president’s stance marks a sharp pivot from the regulatory scrutiny seen under President Biden’s administration, during which the SEC pursued strict oversight following a 2022 market slump. Digital-asset companies spent heavily in support of crypto-friendly candidates, and Trump’s win has bolstered hopes for supportive regulatory reforms.

Trump’s pro-crypto agenda and election success have catalyzed a record-breaking rally for Bitcoin, with the potential for more favorable regulations on the horizon. Institutional investors, who had de-risked before the election, are now re-entering the market, adding sustained buying pressure. As Trump’s administration prepares to implement crypto-friendly policies, including regulatory support and potential tax cuts, the digital-asset market could continue to see substantial inflows. His pivot from past criticism of crypto aligns with industry ambitions for mainstream adoption, positioning the US as a leader in the digital-asset sector under his pro-crypto administration.

Teraco Taps Absa for $442M Loan to Build New Data Center in Africa

Teraco Data Environments Ltd., Africa’s largest data-center operator, has enlisted Absa Group Ltd. to syndicate an 8 billion rand ($442 million) loan, as it prepares to build a new facility to meet surging demand for artificial intelligence (AI) applications.This expansion will increase Teraco’s capacity to 228 megawatts, catering to hyperscaler specifications and incorporating liquid cooling to support AI infrastructure, according to CFO Samuel Erwin.The financing round, led by Absa and backed by South African asset managers, will fund the new AI-ready facility. This builds on Teraco’s 2023 raise of 11.8 billion rand to refinance debt and complete another data center, set to go live in early 2025.

Teraco’s latest expansion reflects rising demand for data-center capacity in Africa, driven by the continent’s young, tech-savvy population and growing need for internet services. With only 2% of global data-center capacity, Africa offers a significant growth opportunity, expected to reach $7 billion by 2027. Teraco, acquired by Digital Realty Trust in a $3.5 billion deal, aims to maintain its lead in the African market amid competition from new players like Equinix and Amazon Web Services, who are also investing in African infrastructure.

South Africa Declares National Disaster After Severe Floods, Storms

South Africa has declared a national disaster after floods, storms, and hail caused widespread destruction from October 22 to 29, impacting several provinces, including Eastern Cape, KwaZulu-Natal, and Gauteng.The declaration allows the government to mobilize funds for immediate relief and long-term reconstruction efforts. The severe weather has left at least 10 people dead and displaced hundreds, with significant damage to property, infrastructure, and the environment, according to the National Disaster Management Centre.The declaration places primary responsibility for recovery efforts with the national government. This disaster comes almost a year after South Africa’s previous climate-related national disaster, declared in 2023 following coastal storms. Recent months have also seen unseasonal snowstorms in September and November, indicating increasingly volatile weather patterns in the region.

South Africa’s national disaster declaration underscores the growing impact of extreme weather, attributed to climate variability. The country’s infrastructure and public services face increasing strain from recurrent storms and unseasonal weather. The government’s response, leveraging national funds for relief, reflects the urgency of addressing climate resilience. As severe weather events become more frequent, South Africa’s commitment to managing and adapting to climate risks is increasingly crucial for public safety and economic stability.

Bitcoin Rally Pauses as Market Weighs Trump’s Pro-Crypto Policies

Bitcoin’s recent surge took a breather on Wednesday, trading around $87,900 after reaching a record high of $89,968 following President-elect Donald Trump’s support for crypto.Bitcoin has gained roughly 30% since Trump’s November 5 election victory, as his administration pledges a favorable regulatory framework, a strategic Bitcoin reserve, and aims to establish the US as a crypto hub.Despite optimism, traders are questioning whether Trump’s administration will prioritize crypto amid pressing issues like China policy and economic recovery. Dogecoin also saw significant gains, up 80% over the past five days, partly driven by Trump’s announcement that Elon Musk would co-lead a new government efficiency department.

While Trump’s pro-crypto stance has driven Bitcoin to new highs, further gains may depend on his administration’s ability to prioritize digital assets amid other policy challenges. Rising Treasury yields and inflation expectations are adding pressure, but crypto markets show resilience, with muted leverage limiting sharp corrections. Bullish sentiment persists, with significant options bets on Bitcoin reaching $100,000 and inflows into US Bitcoin ETFs exceeding $1 billion earlier this week.

South Africa Raises $3.5B in First Dollar Bond Sale Since 2022

South Africa returned to international debt markets for the first time since 2022, raising $3.5 billion through two new dollar bonds. The 12- and 30-year bonds were priced with yields of 7.1% and 7.95%, respectively, drawing strong interest with total demand exceeding $10 billion.Investors view the new coalition government, formed after May’s election, as a positive sign for reforms and growth. The alliance, including the African National Congress, the Democratic Alliance, and other smaller parties, has pledged to address unemployment and boost the economy.The issuance comes during a challenging environment for emerging markets as rising U.S. Treasury yields suggest higher funding costs. “Timing is decent—spread has narrowed significantly,” said Søren Mørch, head of emerging-market debt at Danske Bank, who expressed cautious optimism about South Africa’s new reform agenda. Citigroup and Goldman Sachs were bookrunners for the sale.

This dollar bond sale marks South Africa’s re-entry into global financial markets amidst shifting dynamics for emerging markets. With the U.S. Federal Reserve signaling tighter monetary policy, the rising Treasury yields are expected to increase borrowing costs for emerging economies, including South Africa. The current coalition government’s reform priorities will be closely watched as investors weigh the country’s ability to deliver on economic and fiscal stability. The country’s Eurobonds recently saw yield spikes but remain below pre-election levels, showing some investor confidence in a stable reform path.

Botswana Aims to Become African Hub for High-Net-Worth Individuals

Botswana is positioning itself as a potential hub for high-net-worth individuals (HNWIs) and families in Africa, with a push to diversify its economy beyond mining and into financial services, according to a new study by investment management firmOcorian.Botswana, known as the world’s largest rough diamond producer by value, is seeking to attract foreign investment through improved regulations and enhanced ease of doing business, aiming to mirror the success of Mauritius as a low-tax jurisdiction for affluent clients.Africa’s ultra-high-net-worth population, which stands at over 135,000 dollar millionaires, is expected to grow by 65% over the next decade, presenting significant opportunities for countries that can meet the demands of this expanding market.

Botswana’s regulatory improvements and focus on financial services have positioned it as one of the continent’s key players, alongside Rwanda, which is rapidly establishing itself as a technology and innovation hub. However, the report also highlights challenges Botswana faces, particularly its limited expertise in the financial services sector. This lack of experience, coupled with a recent downturn in diamond revenue, has slowed the country’s economic diversification efforts. In the October 2023 elections, Botswana’s ruling party lost its parliamentary majority, signaling public frustration with the pace of economic transformation. Despite these challenges, both Botswana and Rwanda are making strides in the financial and tech sectors, but they still have a long way to go to rival Mauritius, a well-established offshore financial center known for its attractive tax environment, luxury tourism, and international investment appeal.

South Africa’s Unemployment Rate Sees First Drop in a Year to 32%

South Africa’s unemployment rate dropped to 32.1% in the third quarter of 2024, marking its first decline in a year, as the economy shows signs of recovery. The broader unemployment figure, including discouraged workers, also improved, dropping to 41.9%.The rate fell from 33.5% in the previous quarter, with analysts forecasting a smaller drop to 32.8%. The improvement was driven by significant job gains in the construction and community services sectors, which added 176,000 and 294,000 jobs, respectively.The decline in unemployment is seen as a positive signal for the country’s new government of national unity, formed after May’s elections. President Cyril Ramaphosa’s administration has prioritized infrastructure investment and job creation to tackle the country’s high unemployment levels. The business confidence boost, following the formation of the coalition government, and a more stable electricity supply from Eskom are contributing to the economic recovery.

South Africa’s job market is showing early signs of recovery, supported by growth in construction and services sectors. The decline in unemployment aligns with the government’s focus on infrastructure investment, which aims to generate long-term job creation and economic stability. The reduction in power outages, which have long hindered economic activity, has also contributed to the improved employment figures. With 30% of the population expected to rely on social grants in the coming years, the government is aiming to balance job creation with fiscal sustainability.

This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients. Daba is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.