African Thoughts: April 22, 2013

Risk aversion was clearly the name of the game last week as developed markets came under some serious pressure with bad economic data from the week before spilling over to cause some form of profit taking. African markets ended the week rather mixed. As per usual we take a look at some of the best and worst performing markets across the continent.

Zimbabwe:

The Zimbabwean market enjoyed a relatively solid week with the Mining Index gaining 2.16% followed by the Industrial Index which gained 0.16%. Activity however slowed down last week due to the Independence Day holiday which took place on Thursday. It was the usual blue chip counters that drove activity with Econet accounting for the Majority (30%) of trade as foreigners continue to seek exposure to the big names. Delta released a trading update early last week and said that they expected the financial performance for the year to be in line with expectations despite lager sales volumes slumping 6% in the fourth quarter.

Zambia:

The Zambian marker put in solid performance last week with the LuSE gaining 1.44% on much improved volumes thanks to a number of crosses that took place in the bigger counters. Zambia Sugar was the large reason behind the rally as the name gained 13.6% thanks to a cross that took place where the buyer was foreign. Standard Chartered Bank also managed to rally and gained 6.4% for the week.

Tanzania:

There was renewed foreign investor interest in the Tanzanian market last week which helped spur the bourse 0.54%. Foreigners were particularly interested in CRDB and NMB with foreigners accounting for over 90% of activity in the names. On a performance point of view the banking heavyweights enjoyed mixed fortunes with NMB gaining 5.97% while CRDB fell 1.35%.

Kenya:

The Kenyan market came under quite a bit of pressure last week and was one of the worst performers on the continent with the NSE 20 Index falling 3%. On the positive side foreign investor inflows increased 36% to $8.7m with most of the focus on EABL ($5.12m). On the corporate side, Nation Media went ex-divvy and as result fell 27.3% to KES 287. The IMF approved an additional disbursement of $100m foreign exchange support loan which helped strengthen the Shilling last week. The CCK released its quarterly update which saw the number of subscribers increase 1% q/q and 13.9% y/y to 30.7m while mobile data/ internet subscriptions increased 11.5% q/q and 75% y/y to 9.4m connections.

Egypt:

The Egyptian market ended the week with a bearish sentiment with the EGX30 ending the week down 1.70% on low volumes, the negative sentiment was gained after doubt overshadowed the HRHO/Qinvest deal following the company's release that execution time might be too tight for the deal to go through without expiring. Another piece of news which came as a surprise and added to the overhang was the court sentencing PM "Hesham Qandil" to a year in prison as he failed to comply with previous court decision over returning a textile company to the state. The real estate stocks manage to gain investors interest. It's worth mentioning that the surge amidst the Real estate sector stocks was driven by news that the Cabinet of Ministers has approved the settlements of the Conflict Resolutions Committee with 11 investors with PHDC to get permits Matrouh land (Egypt's North Coast), right to reclaim payments on returned land; TMGH also obtains renewal in approvals on Four Seasons Extension.

Nigeria:

There was some profit taking witnessed in Nigeria last week as the ASI fell 1.55%. The move lower was largely attributed to banking stocks as the volatility in the sector continued with the Banking Index falling 3.74% on the week. A number of banking stocks have started to release their Q1 numbers with Guaranty Bank with PAT increasing 16.80%. As results continue to be released we expect the volatility in the sector to continue. The consumer sector also came under a fair amount of pressure with the Consumer Goods Index falling 1.43% for the week. The major consumer heavyweights all pulled the sector lower with the likes of Nigerian Breweries, Guinness and Nestle all succumbing to some form of selling pressure.

Mauritius:

The Mauritian market was rather quiet last week and closed in the red with the Semdex falling 0.5%. The banking sector seemed to be the drag on the market as banking giant MCB fell 1.1% followed by Bramer Banking which fell 2.1% while SBM managed to end the week flat. From an activity point of view foreign investors were net buyers to the tune of $1.65m.