Impact of Trump’s tariffs on African markets

The global financial markets kicked off the week in a state of chaos as US President Donald Trump followed through on his threat to implement additional tariffs, escalating the ongoing trade war. The International Monetary Fund (IMF) has warned that this trade dispute poses a significant risk to the global economy, causing turmoil across world financial markets. CNBC Africa invited Gideon Sang, Senior Investment Research Analyst at BK Capital, to shed light on the repercussions of these developments on African markets, particularly in Rwanda. Sang noted that while the immediate impact of the tariffs on African markets is yet to be fully felt, countries, especially those under the African Growth and Opportunity Act, are already looking to diversify their export markets to mitigate potential risks. This proactive approach aims to reduce dependence on the US market, anticipating strained trade relations in the short to medium term. Turning his focus to the Rwandan markets, Sang highlighted a relatively stable performance last week, with slight increases in the Rwandan Stock Index (RSI) and the oil share index driven by gains in Bank of Kigali shares. Looking ahead, he anticipated heightened interest in dividend-paying counters in the coming week. When discussing the broader impact on regional markets such as Kenya, Tanzania, and Uganda, Sang underlined that while current market performance remains positive, it is not necessarily a direct result of the recent tariffs. He emphasized the importance of monitoring the market's response to the tariffs in the short to medium term, particularly in the context of export dynamics. In closing, Sang addressed the vulnerability of the Rwandan franc against major world currencies, citing a 2.3% depreciation year-to-date. He projected ongoing pressure on the currency due to factors like export income uncertainties stemming from the tariffs, foreseeing further depreciation as the year progresses. As global trade tensions continue to escalate, African markets are bracing for potential disruptions and volatility, with stakeholders closely monitoring developments to navigate the uncertainties ahead.