Investing in 2009

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The fallout from frozen credit markets permeated all sectors of developed economies and has spread to the developing world. Caribbean stock markets have suffered, but not as much. If 2009 brings a rebound in the U.S. market, analysts say Caribbean markets would recover pretty quickly.

The Jamaican main equity index fell 13 percent in December, while the Barbados mart fell nearly 8 percent for the month. But robust performance by tourism, banking and wireless communications sectors are promising to lift the market in the months ahead, according to analysts. The Barbadian dollar has remained pretty strong, as has the Jamaican dollar, despite recent surge by the U.S. dollar.

In Africa, South Africa’s main index, the FTSE/JSE Africa All Share Index, lost nearly 10 percent in December and 27 percent for the year, the first annual drop in six years and its biggest decline in at least 13 years. South Africa’s currency slumped almost 30 percent against the U.S. dollar during the year as foreign investors sold about 73 billion rand (US$7.5 billion) more than they bought of South African assets in the wake of the worst financial crisis.

But the JSE staged a comeback during the last two weeks of December, recording a new trading record of 128, 337 trades on Dec. 18.

In Kenya, the stock market capitalization fell to 709 billion shillings ($9.15 billion) from the previous day’s 740 billion shillings ($9.55 billion). The NSE 20-Share Index also went down 35 percent since midyear. The stock market slumped in the fourth quarter due to panic selling by foreign investors. But some sectors are making a comeback, especially technology, airline and tourism. Meanwhile, the Kenya shilling continued to hold against the dollar.

In Egypt, foreign investors who plunged the market 17 percent have made a dramatic return, buying up the Egyptian pound and boosting many blue chip shares at relatively cheap prices. Shares in construction and telecommunications were up 6 percent in recent weeks. The benchmark CASE 30 index, which in mid-December fell to its lowest level in 45 months, was up 2.89 percent to 3,978.67 points at month-end.

In Nigeria, the main stock index lost nearly half its value in 2008 and investors lost 3.9 trillion naira ($27.8 billion), but that was about 10 percent better than the previous year. Analysts there believe they are off to a good start in the New Year and are advising investors to look for stable, well-run companies in productive sectors such as banking, beverage and insurance.