Investors update: January 2 2023 - Weak growth but strong markets expected

Weak growth but strong markets expected in 2023

Highlights

• The global economic and investment landscape in 2022 was subject to three strong headwinds: aggressive interest rate tightening to contain inflation, China’s zero Covid-19 policy, and the invasion of Ukraine by Russia.
• Africa’s recovery from the pandemic-induced slump was abruptly interrupted last year. Economic activity bounced back in 2021, with GDP growing 4.7%, but it’s expected to slow sharply to 3.6% in 2022.
• A lot of uncertainty remains around the same headwinds that rocked the global economy this year, but there are many reasons to be positive about 2023, especially as it concerns Africa’s financial markets.

Source: Daba Outlook

Our Takeaway

The near-term outlook for the African economy is highly uncertain amid a highly-anticipated global economic recession this year, triggered by policy tightening and the erosion of real spending power. In addition to external factors, a host of countries on the continent face respective internal challenges. Regardless, Africa should avoid a major economic downturn and while growth will be subdued, we expect financial markets on the continent to build on 2022’s momentum and outperform their EM peers.

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Nigerian equities close 2022 with a 19.98% gain

Highlights

• The Nigerian stock market ended the year 2022 on an impressive note, as investors increased their buying pressure, especially on blue-chip stocks. 
• The NGX All Share Index gained 19.98% in 2022 compared to 6.07% in 2021 and was positive on a year-to-date basis throughout 2022 for the first time since 2013.
• In addition, the benchmark index ended the year with 51,251,06 points; the only other time it ended with over 50,000 points was in 2007.

Source: Nairametrics

Our Takeaway

Despite the rising inflation and interest rate hike, Nigeria’s equities market finished the year 2022 on a bullish run, with a market capitalization of N27.915 trillion as of December 30, from N22.296 trillion on January 4, 2022. The bourse recorded several landmark listings in equity and fixed income, including BUA Foods and Geregu Power, which played a key role in driving growth in the market last year. And remarkably, the 19.98% gain saw the NGX ranked the 4th best bourse in 2022 globally in terms of return on investment.

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Egypt-based Mahaseel Masr raises funding to scale

Highlights

• Egypt-based agritech Mahaseel Masr has raised funding from Emirates International Investment Company (EIIC).
• The startup, founded in 2020 by Mohamed Abdel Rahman, offers a B2B marketplace for fresh produce, connecting farmers and growers to global buyers.
• The fresh infusion of capital will be used to accelerate the deployment of its e-commerce platform, and enhance its product offering and supply chain operations.

Source: Wamda

Our Takeaway

The spate of tech innovation seen in Africa over the past few years places the continent as one of the global leaders in agritech. Between 2016 and 2019, the industry grew by 44% year-on-year, and the continent has registered the highest number of agritech services in the developing world, reaching more than 30 million smallholder farmers as of 2021. On its part, Mahaseel is catering to a growing demand for first-rate fruits and vegetables at competitive prices, driven by a global rapid population increase and raised digital awareness.