The global stock markets have experienced a variety of plunges and recoveries in stocks, and a few have even undergone a crash as investors pulled back in fear of a global recession.

The impact of COVID-19 on Africa

Sub-Saharan Africa is expected to see an economic growth decline from 2.5% in 2019 to between -2.1% and -5.1% in 2020. Provided that it all depends on the measures taken to combat and mitigate the effects that COVID-19 had on the African continent.

The decline of economic growth is largely based on contractions in South Africa, Nigeria, and Angola. All three countries heavily rely on the export of commodities that have seen severe price crashes along with other structural issues involved, but with some relief forecasted.

These factors must be taken into consideration as it may inevitably affect the participation that Africa has in trade and value chains along with the reduction in foreign financing flows.

The JSE, COVID-19, and hope for African stocks

The Johannesburg Stock Exchange, or the JSE, is the largest Stock Exchange in Africa by Market Capitalisation. Amidst the COVID-19 pandemic, the JSE remained open for trading by enabling transparency and the ability to trade out of positions.

In addition, access was provided to capital along with disclosure which was enhanced for the protection of investors and despite the relaxation in lockdown regulations and measures, these protection measures are ongoing.

As lockdown measures in South Africa has eased to Level 2 where a great part of the economy has opened, the JSE has shown significant rises as the ban on alcohol was lifted along with the sale of tobacco.

In addition, hospitality shares have soared in hotels, gaming, and entertainment giants as the ban on provincial travel eased with a further increase in government bonds.

Some of the highly sought-after shares on the JSE include British American Tobacco, Naspers, Richemont, Anglo American, Mondi, and Shoprite Holdings.

Should you buy stocks while COVID-19 is still classified as a pandemic?

A lot of investors may be torn between buying stocks and selling as there is a lot of uncertainty that still exists as the COVID-19 pandemic continues and will continue until it is no longer classified as such.

When looking at the African stock markets and the companies listed, it is important to look at the following factors when considering investment in a certain stock listed on one of the African stock exchanges:

• Whether the company has the cash to withstand a prolonged downturn in business, and
• Whether there is anything about the current COVID-19 economy which can fundamentally change the future for the company or stock.

It is necessary for investors to consider the historical performance of a stock, despite the COVID-19 pandemic, the current standing on the stock during the pandemic, and the prospects that it has post-COVID-19 say Erik Marais from MakariosFX - An African Investment Analyst.

Final Thoughts

Investors are advised to consider stocks that have remained strong during the pandemic, and to look towards companies that have risen above all the rest such as healthcare and technology companies who are set to be the strongest survivors and worth an investment.