African Thoughts: April 23, 2012

While global markets returned a mixed week in terms of performance, African markets found some renewed vigour in terms of volumes while some names and sectors found strong buying interest, as will be noted below.

Best:

Namibia:

Namibia (+1.6% local, +3.4% USD); South Africa (+1.5% local, +3.3% USD): As always, SA and Namibia closely correlate with each other and typically follow global markets quite closely. However, this past week saw some mixed performance from global markets while SA and Namibia performed incredibly well. Demand for resource intensive Emerging markets like SA spurred a lot of this demand, but the biggest factor that drove the ALSI higher was the news that Citigroup may include SA debt in its World Government Bank Index. According to Citi, the SA govvies met all the requirements for inclusion in the global gauge for April, and if it continues to meet these requirements in May and June then the bonds will be included from October. This created some strong demand for the bonds which saw the yields fall as well as some ZAR strength. The ZAR went from trading above the R8.00 level to the current level of around the R7.84 level.

Nigeria:

Nigeria (3.4% USD terms): A very positive week for a number of reasons in Nigeria. Without doubt, the biggest story was about the PIC, Africa’s largest fund manager, having acquired a 20% stake in Ecobank. The banking sector was the primary driver of both vols and performance with the BNK10 up 9.77% for the week. In addition to the ETI news we saw a number of Nigerian banks release results. UBA announced their FY11 results (poor) and then their Q1 12 results (good) and the name saw active trading. First Bank released their FY11 results which were good and the counter traded at limit up for a number of days to close the week at N11 (+20.75% for the week). Skye Bank, Fidelity and GTB also released results. In the consumer sector we saw some strong performance, most notably in NB after they released good Q1 2012 numbers. NB closed up 11.43% at N109.20 while Guinness was also strong closing up 4.51% at N235.25.

Kenya:

Kenya (3.3% USD terms): A good week in Nairobi as both foreign and local investors find more appetite for Kenyan stocks. A good part of the strength was the surge in names which have been struggling recently. Mumias Sugar rallied by 30% on strong local demand, this being driven by positive sentiment around the new CEO who has gone into politics. Sameer of Kenya released their FY11 results and announced a dividend (although relatively small). EABL also continues to head north after the revenue authority mentioned that non-malt beer volumes had risen by 60% over the past 9 months. BBK, BATK, Safcom, Uchumi and KNAL were also strong for the week. The banking sector saw some strong buying with the sector +2.3% ahead of Q1 results, which should start coming out as of this week. What is very evident though is that foreign fund managers are back buying.

Morocco:

Morocco (2.2% USD terms): Despite a positive week in Morocco the bearish trend for the year continued. Most of the participants believe this weekly rally was nothing more than a technical rebound although rumours of 1 large buyer abounded.

Worst:

Mauritius:

Mauritius (Sem7 -0.9% in USD terms): The Indian Ocean island had a slightly soft week last week with the Sem7 down 70bps in rupee terms. Most of this softness was caused by the weakness in the banks with MCB -1.2% and SBM -0.60% on active trading while tourism had a mixed week (NMH +0.70%, Lux Island Resorts -0.50%, Sun -2.5%). There was also news of a proposed amalgamation between Bramer Banking Corp, Mauritius Leasing Company and Bramer Holding which will be effective from 2 May 2012.

Zimbabwe:

Zimbabwe (Mining -0.8%, Ind -0.2%): Both indices in Zim came off slightly last week with the Ind index down 23bps and the resource index down 80bps. Turnover also showed a large improvement on the previous week and this was mainly due to large volumes going through in Delta and Old Mutual which both went through on Friday. The improvement in vols were much appreciated especially since a trading day was lost on Wednesday due to the Independence Day celebrations. The RioZim rights issue results were also released during the week with 60.63% of the 10mill rights that were offered were subscribed to. The rights offer shares are to be listed on the ZSE as of today, 23 April 2012. In terms of the large caps that are due to release results: Econet are due to release their FY to end of Feb12 at any day now and Delta are due to release results on 9 May 2012.

Tanzania:

Tanzania (-0.50% in local terms): Most of the drag down was due to TBL (-5.7%) and CRDB (-6.6%). The bad news out in TBL was that the CMSA is not approving any blocks to go through to foreign buyers while CRDB was down possibly by the fact that its dividends announcement failed to get investors excited. In Tatepa, there was a pre-arranged block trade of 1.7mill shares which foreign investors participated in.