African equity markets delivered their strongest performance in years during 2025, comfortably outpacing Wall Street and global benchmarks, though one leading fund manager is urging investors to temper expectations and brace for the volatility that has long defined the continent’s markets.
According to Rory Kutisker-Jacobson, fund manager of the Allan Gray Africa ex-South Africa (SA) Equity Fund, the MSCI Emerging Frontier Markets Africa ex-SA Index (EFM Africa ex-SA Index) surged 42.2% for the 2025 calendar year. By comparison, the S&P 500 gained 17.9%, the MSCI World Index rose 21.1%, and the MSCI Emerging Markets (EM) Index climbed 33.6%. The Allan Gray Africa ex-SA Equity Fund itself outperformed all of those benchmarks, returning 62.9% for the year.
Despite the eye-catching headline numbers, Kutisker-Jacobson cautioned against reading too much into a single year’s result. “Measured over three years and longer, the stellar returns of African markets in 2025 look significantly less stellar. One could argue that much of the outperformance seen in African markets this year resulted from recovering the underperformance of prior years,” he said.
Over three years, the S&P 500, MSCI World and EM Index delivered annualised returns of 23.0%, 21.2% and 16.4% respectively. Over the same period, the EFM Africa ex-SA Index returned 14.5% per annum, lagging its developed and emerging market peers.
“Returns across African markets have historically been volatile and lumpy. As such, investors should temper expectations that consistently stellar returns will be achieved without some degree of volatility and drawdowns over any multi-year period,” he said.
Nevertheless, Kutisker-Jacobson said underlying valuations remain compelling and pointed to specific holdings as evidence.
Egypt’s Eastern Tobacco, which he described as the dominant cigarette producer in the country, generated a 43.1% total US dollar return in 2025, and still trades at a forward price-to-earnings (P/E) multiple of less than 7 times with a dividend yield above 7.5%. Zimbabwe’s Delta Corporation, the country’s leading beer producer, returned 61% in the same period. Delta Corporation’s beer volumes are at 15-year highs, more than 80% of its Zimbabwean sales are now conducted in US dollars or South African rands, and the company traded at an earnings multiple of roughly 8 times with a dividend yield of 5.6% at year-end.
These valuations stand in contrast to the S&P 500, MSCI World and MSCI EM indices, which closed 2025 on P/E multiples of 27 times, 24 times and 17 times respectively.
Allan Gray’s fund also holds significant positions in four African banks: Nigeria’s Guaranty Trust Holding Company (GTCO), Zenith Bank, and Stanbic IBTC Holdings, alongside Egypt’s Commercial International Bank (CIB). Together, these four positions accounted for 23.7% of the fund’s net asset value (NAV) at year-end, and their average US dollar return in 2025, including dividends and corporate actions, reached 77%.
“We believe we are paying a low price for tier-one banks in their respective markets, particularly when you consider that the average return on equity across the four is north of 30%,” Kutisker-Jacobson said.
Across the commodities and energy sectors, the fund’s main holdings include Zimplats, a platinum group metals (PGM) miner in Zimbabwe; Endeavour Mining, a West African gold producer; and Seplat Energy, a Nigerian oil and gas company.
Ghana-listed stocks were not among the named positions in the commentary, though Ghana forms part of the broader West African investment universe that Allan Gray actively monitors. The 2025 returns across Nigeria in particular, where GTCO, Zenith, and Stanbic IBTC are listed, are broadly consistent with the recovery of the Nigerian Exchange Group following the naira’s stabilisation.
“There is ample evidence of companies that are generating healthy levels of cash and, on our estimates, can be bought for less than 10 times spot earnings,” Kutisker-Jacobson said, adding that the upside potential in African markets remains substantial.
Past performance is not a guarantee of future returns, and all investments carry risk including the potential loss of capital.
