Can Africa's equity markets rebound from their ten-year low?

Two hard years for African equities

2014 and 2015 have been unkind years for African equity investors with markets down -13% and -21% respectively, amid sustained pressure from the forces that have battered emerging and frontier since mid-2014, including dollar strength, weak commodity prices and economic deceleration across the developing world.

The biggest headwind affecting recent returns in African equities has been weakening currency. 2015's total negative returns were -21.8%, of which currency losses represented -15% (equivalent to 71% of total losses). As the commencement of the rate tightening cycle in the US continues to hurt capital from emerging and frontier markets, we have observed over the last 18 months an unprecedented synchronised collapse in FX exchange rates across Africa. Between 2000 and 2013, the average annual deprecation of African currencies was circa-3.5%. However, over the last 18 months currencie...