Global markets jittery ahead of Fed decision

Global investors are eagerly awaiting the US Federal Reserve's decision on the long-awaited interest rate cut, causing jittery movements in markets worldwide. CNBC Africa spoke with Pamela Akidi, Manager of Retail Sales Global Markets at Stanbic Bank Uganda, to discuss the performance of the equities market in Uganda and the stability of regional currencies. Akidi highlighted the strong performance of key counters in Uganda, including Stanbic, MTN, and Umeme. Stanbic saw a 10% growth in its share price, driven by a strong half-one performance with a 12% increase in profit after tax. MTN also experienced a 3.5% price growth, fueled by a 29.7% increase in profit after tax and a soon-to-be-declared dividend of 6.6 per share. Umeme, on the other hand, witnessed mixed investor sentiments as they position themselves ahead of the payout at the end of the concession period in March 2025. Activity in the equity market is expected to remain stable for Umeme, while Stanbic and MTN are anticipated to experience further price increases in the coming months. Regional currencies, including the Ugandan shilling, have strengthened due to increased export receipts, particularly in the coffee sector. Uganda's export receipts for coffee have seen significant growth, leading to a strong appreciation of the currency. This trend is expected to continue with anticipated inflows towards the end of the financial year. Furthermore, as the quarter three reporting season approaches, investor interest is growing in counters like Kenya Commercial Bank, Standard Chartered, and APSA, all of which have shown significant year-on-year growth. The performance in Q3 and Q4 of 2024 is expected to surpass the weak performance witnessed in the same periods in the previous year. Looking ahead to the US Federal Reserve's decision, Akidi predicts a rate cut, with uncertainty lingering over whether it will be a 25 or 50 basis points cut. The market remains divided on the decision, which could impact portfolio inflows in emerging and frontier markets like Uganda, Kenya, and Tanzania. The expected cut, coupled with attractive yields and low inflation rates in Uganda and Kenya, is likely to drive further investments and support market stability. However, with the US elections approaching in November, potential market volatility could influence investor decisions. Akidi's hunch is for a 25 basis points cut, but the final decision remains to be seen, adding to the anticipation in the global markets.