Tumbling commodity prices, indications of a slowdown in Chinese growth and a risk-off sentiment inspired by the first rise in US interest rates since 2006 were among the major themes driving African indices in 2015.

Tim Edwards, Senior Director, Index Investment Strategy at S&P Dow Jones Indices, has analyzed the African markets for 2015, saying that “it was a bleak year as the S&P All Africa Index fell in 9 of the 12 months, finishing the year with a -20% total return”.

The US dollar strengthened against local currencies and emerging market equities suffered in 2015.
“Africa was no exception,” said Edwards.

Major news stories included the political turmoil in Egypt and - earlier in the year - the significant risk from an Ebola epidemic in West Africa.

Oil producers and countries with major trading relationships with China suffered particularly in a year when volatility was never far from the markets.

Edwards noted that despite this challenging macroeconomic environment and frequent home-made political controversy, South Africa's equity markets generally recorded positive returns in local terms.

“The S&P South Africa Composite gained 4.6% for the year in total return. However, the South African rand depreciated by close to a quarter over the year; in US dollar terms, South Africa's equity performance converted to significant declines,” he said.

Among South Africa equity strategies, Momentum and Low Volatility performed particularly well in 2015, according to Edwards.

“Top spot, however, was reserved for the S&P GIVI South Africa 50; the strategy combines value and de-risking approaches and posted a 12% total return in local terms over the year,” he said.

“Nearly all of our local sovereign bond indices posted gains (the S&P South Africa Sovereign Bond index was the exception). A Q4 total return of over 20% brought the S&P Nigeria Sovereign Bond index to the top of the pack by year end,” he added.