BY ALY KHAN SATCHU

2016 was surely an extraordinary once in a life-time type of year. Big headline events like Brexit and the election of Donald J Trump spoke to a new normal. It certainly felt like the disruption of an old normal. The intersection and correlation between politics and economics was plain for all to see.

The pound moved close to 20 big figures in a window of 24 hours around the Brexit vote. Later on October 7, the pound flash crashed close to 10 per cent. These kinds of price moves are normally associated with frontier market currencies. The FX markets are now driven ‘’by lightening quick, complex, computerised trading programs’’ and these ‘’algorithmic models pick up the same ‘buy’ and ‘sell’ signals, magnifying price swings’’ (Reuters).

Cultural theorist Paul Virilio said: “Wealth is the hidden side of speed and speed the hidden side of wealth.” And when you look at the frequency of these sterling like moves that we have witnessed in 2016 across the FX markets and other asset classes, you cannot but agree. Other interesting points to note are the geopolitical, and, or, market return correlations.

Russian President Vladimir Putin’s parabolic geopolitical rebound was matched by the Russian ruble, the second-best performing currency worldwide, and clocked a 21 per cent appreciation versus the dollar – bear in mind the dollar surged to 13-year highs on a Donald Trump ‘’MAGA’’ pop.

Russia’s RTS Index rallied +50.03 per cent in 2016. The best-performing currency worldwide was a crypto-currency BITCOIN which rallied a might 120 per cent through 2016. BITCOIN appears to have become a proxy for Chinese capital flight.

I draw this Tweet from Christine Lu ‏@christinelu December 30, 2016, to your attention: ‘’If you’re raising money from Chinese investors in 2017, and that money isn’t already sitting outside of China, then have fun signing MoUs!’’ Brazil’s Bovespa Stock Index was the best-performing Index in the world posting a 63 per cent gain in 2016. The Brazil real rallied 20 per cent and investors into Brazil bagged a 83 per cent return.

The commodity complex snapped a five-year losing streak to close about +11.5 per cent in 2016. The energy component of that commodity index rallied +48.2 per cent, with Brent crude registering a +50.9 per cent gain. The Brent crude price trajectory needs to be closely watched in 2017.

If it can build on 2016 gains then, the Saudi King and His dauphin, the deputy crown prince in Riyadh, President Muhammad Buhari in Abuja and Angolan President Dos Santos and others will breathe a sigh of relief. ‘’It’s a Hail-Mary Pass’’ for oil producers, and I am of the view that the pass is going to be fumbled in 2017. Buffers are a busted flush in many countries; not just in Caracas. Caracas might well prove to be the canary in the (oil producers) Calming.

Let’s now turn our gaze to Africa, which is growing at more than 20-year lows. Egyptian President Abdel el-Sisi bit the bullet and devalued the Egypt pound – the pound was -56.00 per cent in 2016. Nigeria, which overtook South Africa as SSA’s biggest economy a while back only to fall back again and cede top dog position again to South Africa, saw its naira slump -36.68 per cent in 2016.

The naira remains the central paradox for the Buhari regime. It has a lot further to fall in 2017. The Mozambique metical closed 2016 -33.27 per cent and Angola was at -18.96 per cent. Investors need to avoid these kinds of situations at all costs. Interestingly, the South African rand posted an 11 per cent return just behind the Zambia kwacha at +11.96 per cent. The shilling finished out the year trading at 102.50 versus the dollar.

Currencies like the South Sudanese pound and the Burundi franc cratered. From a currency perspective, Africa is a landscape littered with unexploded FX Ordinance. Zimbabwe, of course, is experimenting with its ‘’bond notes’’. It is predicted and predictable that the Bond Note Jig is up sometime in 2017.

The equity markets in Africa were led by Namibia which returned +34.13 per cent in 2016. South Africa was lifted by the currency gain to register an 11 per cent return for investors. Nigeria posted -41.4 per cent, Lusaka -16.53 per cent and Nairobi just above -12 per cent when currency adjusted. Investors need to have their wits about them.