Monthly Highlights: January 2008

•  Expect volatile trading conditions in Kenya & Zimbabwe amid heightened political risk
•  Nigerian equities posted strong performance on the month
•  Southern Africa remains anchored by the ongoing power crisis
 

Expect volatile trading conditions in Kenya & Zimbabwe amid heightened political risk

The socio-political environment in Zimbabwe has resulted in volatile trading conditions, and we expect this trend to continue as we approach March elections. We are actively monitoring the situation, and have adjusted our return profile to account for greater exogenous risk within the region. In Kenya, post-election violence erupted, as investors remain on the sidelines. As mentioned in previous commentary, we have used post-election skittishness as an opportunity to pick up undervalued Kenyan equities with strong management, superior earnings growth and solid fundamentals.

Nigerian equities posted strong performance on the month

Nigerian equities continued their ascent on the back of rising oil prices and improving investor sentiment. Investor sentiment was buoyed by the Nigerian insurance sector which benefited greatly from sector reform. Insurance remains a bright spot for Nigeria as the sector contributed greatly to the market’s overall out performance.

Southern Africa remains anchored by the ongoing power crisis

Zambia was the only Southern African market to exhibit positive performance on the month as the region struggled on back of the ongoing power crisis. Investors have grown increasingly concerned as currency markets slid to cyclical lows.