African Thoughts: April 02, 2012

Well we are back from a very successful conference and trip around the UK. After a 2011 which we all wished had never happened, 2012 has started on a much more positive note. Part of this is obviously due to a more positive global environment, notwithstanding the euro concerns, US deficit and China "hard landing". In general, investors and market participants are more bullish that they have been for some time.

The big news for Securities Africa is our purchase of Skye Stockbrokers in Nigeria. This was part of their divestment from non-core businesses. We are extremely proud and excited at this as it will enable us to continue to grow and develop our market share in SSA’s largest market. If anyone would like more information on this please feel free to contact me. The new company will be rebranded Securities Africa Nigeria.

Our conference was highly successful, thanks to all who attended and made it such a success. I am sure you all agree that the conference grows from strength to strength. My only concern is how to better it in 2013!! What was also very pleasing to note was the number of new investors and new potential investors attending, which also says a lot for the growing interest in our asset class. A growing interest will benefit all of us, from investing, liquidity and trading points of view.

Another positive I picked up on was that as dire and depressing as 2011 was many funds did not see any large scale fund outflows. In fact, fund sizes seem to have grown, particularly through 2012 Q1. This tells us a lot that the underlying client monies are in it for the long haul, which is exactly what African investing should be.

Some comments on the markets which seemed like a common thread amongst many conversations that we had:

Kenya:

Kenya is starting to become popular again. The Nairobi bourse was out of favour for a long time due to well documented macro factors but interest and activity is perking up and is definitely back on the radar screens.

Nigeria:

Nigerian banks - after an extremely tough 2011 there is definitely renewed interest in the sector. A lot of the past issues have been sorted out and with many names having been sold off dramatically there is a lot of talk about how cheap the names are looking.
Nigerian consumers - as always, many investors like the story of the consumer in Nigeria. These names are more difficult to trade than the banks and do look a bit more expensive at these levels but are still much liked by investors.

Zimbabwe:

Zimbabwe - a large number of investors and funds cannot invest in Zim due to political issues but those that can, despite the political nonsense, like the market. As a USD traded market there are also no currency issues for most funds. Typically, participants look at the usual large cap names. Securities Africa is the no 1 foreign participant (in terms of value traded) in Zimbabwe and the other point that is worth noting is that some of the local funds have a liquidity squeeze and have thus been offering some decent blocks for sale.

Ghana:

Ghana - one of the most popular markets in our universe due to their macro environment. However, many participants are disillusioned with the illiquidity of the GSE. I have raised these concerns with the GSE and the CSD in Accra so let's see what they implement to improve the problem.