African Thoughts: April 16, 2012

With most markets around the globe disrupted as a result of Easter celebrations, volumes were rather thin in Africa last week. Some markets however had days that were rather active but this should be taken with a pinch of salt as trading was dominated by a few large crosses. With regards to market performance the continent was rather mixed as there was no real trend.

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

Kenya:

Kenya was the top performing market on the continent last week with the NSE 20 Index gaining 1.6%. Foreigners showed interest in the East African market and were once again net buyers. There were large crosses all week in the likes of Safaricom, Equity Bank, Kenya Commercial Bank and Mumias Sugar. Uchumi was the week’s top performer as a result of investor speculation on the growth of the company. Local fund managers have also been moving from fixed income into equities lately in search of a better yield. On the negative side the Energy Regulation Commission has raised the prices of diesel, petrol and kerosene on Saturday as a result of international crude prices. This move will naturally have a negative impact on inflation.

Malawi:

Malawi put in a solid enough performance with the market gaining 0.7% thanks to moves higher in the likes of NBM, NITL and Standard Bank. NBM has been under some pressure of late and investors seem to be finding some value in the name after the company confirmed a loss emanating from investment in their new head office. NITL put in a good performance as a result of the high sugar prices in the region and speculation that Illovo will release good results (Illovo is a holding of NITL). Standard Bank recently paid a dividend of MwK 9.43. Mrs Joyce Hilda Mtila Banda (former Vice President) has taken over as President after the death of President Dr. Bingu Wa Mutharika.

Mauritius:

Mauritius also put in a good performance with the Semdex 7 gaining 0.7%. On the economic front headline inflation for March decreased to 5.9% from 6.2% in February. The move higher on the market came largely thanks to bank stocks MCB and SBM which both managed to close the week 0.6% higher. There were a number of crosses in MCB with foreigners showing definite interest on the buy side of the name.

Tunisia:

Tunisia’s recent good run continued last week with the market closing the week in positive territory for the fourth straight week, the market managed to gain 0.6% last week on high volume. Gif filters managed to gain 26.43% on the back the announcement of discussions that are taking place with a foreign partner for a technical/ financial partnership. Tourism numbers seemed to be looking better with 938,000 tourists visiting the country in Q1 2012.

Ghana :

Ghana closed the week very flat with the GSE gaining 0.08%. Inflation for March increased 0.20% causing the policy rate to be increased by 100bps. Gross Domestic Product was revised higher from 13.6% to 14.4%. Guinness Ghana’s half year results showed turnover rising to GHC 146.8m. GCB managed to close the week in positive territory after holding a press conference outlining their plans for a much awaited transformation drive.

Morocco:

Morocco was the worst performing bourse on the continent last week with the market falling 3.7%. There were rumours doing the rounds that there is a large local institutional investor that is selling equities as they need to raise cash in order to invest in real estate. Unfortunately there was nothing to report on the economic or political front.

Zimbabwe:

Zimbabwe ended the week mixed with the Industrial Index falling 0.99% to close at 134.14 while the Mining index gained 0.33% to close at 88.80. There was a new call from the National Indigenization and Economic Empowerment Board not to spare banks from giving majority shareholding to Zimbabwean locals, despite efforts by the Finance Minister and the Reserve Bank to stop indigenizing the financial services sector. The Ministry of Finance has highlighted that the Banking Act to improve the legal and regulatory framework of the financial sector will be concluded in the second half of the year.

Nigeria:

Nigeria was rather quiet on all fronts last week with the ASI falling 0.9%. On Monday the CBN released their medium term policy framework and the major highlight was an accommodative policy on how they intend to manage the economy. Another major highlight last week was the signing into law of the budget on Friday. The Stock exchange experienced a number of technical issues last week that caused the market opening to be delayed on a few of the days.