THE FUND

The Fund fell -6,6% in July, just beating the benchmark index MSCI EFM Africa ex South Africa Net Total Return Index, which fell -6,7%. So far this year the Fund has fallen by -25,7%, worse than the benchmark index, which has fallen -24,7%. At a country level, underweights in Kenya (3% of fund assets) and underweights in Mauritius (2%) contributed most positively relative the benchmark. The Fund’s overweights in Ghana (7% of fund assets) and overweights in Egypt (44%) contributed most negatively. At the sector level, underweights in Communication Services along with overweights in Consumer Staples contributed most positively, while the overweights in Health Care and underweights in Financials contributed most negatively relative the benchmark index. The Swedish krona strengthened 6.7% versus the USD in July, decreasing the SEK return of the Fund (all changes in SEK).

MARKET

African equity markets fell (MSCI EFM Africa xSA Net TR -6.7%), underperforming other Frontier markets (MSCI FMxGCC Net TR), which fell 6.2% during the month. South Africa was the best African stock market falling 0.1% followed by Namibia, falling 0.4%. Kenya was the worst African market declining by 10.1% while Mauritius was the second-worst performer, falling 8.3%. (all changes in SEK)

In Egypt (Hermes Index -5.2% in June, -24.5% year to date) risk appetite seems to be returning for international bond investors. The first two weeks of July is said to have lured more than USD 3bn of foreign investments back into the bond market, after being ongoing net sellers from February 2020. Foreign holdings fell from more than USD 25bn to around USD 10bn in June as global investors withdrew from the Egyptian market.

Nigeria’s (Nigeria Stock Exchange Main Index -5.4% in June, -13.4% year to date) stock market fell again with no apparent buyers around. The Nigerian Petroleum Products Pricing Regulatory Agency (PPPRA) raised the petrol prices by 16% in July, following rising international oil prices, to approximately NGN 142 ($0.37) per liter from NGN 122 in June. This comes after Nigeria earlier this year said they would end petrol subsidies and let the price reflect the moves in the market. Removing the subsidy will save the Nigerian state budget several billion dollars. Inflation rose for the tenth month in a row to 12.6% for June, in line with expectations. Trade restrictions due to Corona is blamed for pushing up food prices.

Kenya (Nairobi All Share Index -10.1% in June, -27.7% year to date). Global rating institute S&P lowered the economic outlook for Kenya from stable to negative, citing stalled economic growth due to the coronavirus pandemic.

Morocco’s (MASI Free Float All Shares Index -1.2% in June, -18% year to date) new budget for 2020 forecasts a GDP drop by 5% and a budget deficit of 7.5% from earlier 3.5% due to the COVID-19 outbreak. New statistics released from the banking industry showed an increase in retail accounts by 5% in 2019 to more than 28 million. 61% of the adult population is said to have a bank account, 79% of men but only 44% of the women. The number of cards increased by 7% to 16.2 million at the end of last year. Increased financial inclusion is one of the key drivers in the banking industry, helping the banks with cheaper funding as well as being a new revenue source from issuing cards mortgages etc.

DISCLAIMER: Capital invested in a fund may either increase or decrease in value and it is not certain that you will be able to recover all of your investment. Historical return is no guarantee of future return. The Full Prospectus, KIID etc. are available on our homepage. You can also contact us to receive the documents free of charge. Please contact us if you require any further information: +46 8-5511 4570.