African Thoughts: August 27, 2012

With the majority of African markets having the trading week shortened due to the Eid celebrations last week; volumes were on the low side. The end of the summer holidays in the northern hemisphere also played its part in the low activity on African markets. Below is a list of the best and worst performing markets in Africa from last week.

Some of the exceptions to the weekly strength were:

Egypt:

Egypt was the best performing market with the EGX 30 gaining 1.5%. The main reason behind the move higher was the announcement by the IMF that they are well on their way to reaching an agreement with the new government on the loan and stating that this should be done by December 2012 (at the latest). There were rumours that Ezz Steel might be reaching a possible settlement with government on their license issue, as the government imposed a fine on the company for acquiring a license without paying the fees.

Nigeria:

Nigeria also put in a fairly solid performance last week with the ASI gaining 1.1%. Banking stocks were one of the major contributors towards the move higher with the Index gaining 0.6% largely on the back of First Bank which managed to gain 4.4% as foreigners sought exposure to the stock. Guaranty Trust Bank and Access Bank are set to release H1 2012 results this week. Dangote Cement (which accounts for 25% of the market cap) gained 2.7% as interest stemmed from the management presentations (which took place towards the end of the prior week) on the H1 2012 results.

Kenya:

Activity in Kenya was characterized by rather thin volume as turnover fell 0.40% on a week on week basis. The market managed to close in positive territory with the NSE 20 Index gaining 0.30%. Safcom was the major contributor towards the move higher with the counter gaining 4.00% to close at 3.90 as foreigners accounted for the majority of purchases (on very thin volume). EABL reported a 24% increase in FY 2012 PBT. Investors seemed to react negatively to these numbers as the counter came under pressure and closed the week 3.97% lower. NIC Bank posted an increase of 42% in H1 pre-tax profit while total income jumped 36%.

Zimbabwe:

The Zimbabwean Industrial Index came under some pressure last week and was the worst performer on the continent, falling 1.99%. Agricultural stocks were the major drag on the market as Interfresh fell 25% after reports that they had been ordered to pay $723,000 to employees after a leave dispute. The likes of Dairibord, Hippo, Ariston and AICO also came under a fair amount of selling pressure. The Mining sector was exceptionally dull with the Index closing the week unchanged as there were only a few trades that took place. On the political front there were differences in opinion on the contents of the draft constitution between Zanu PF and MDC. According to a news report Zimbabwe is poised to become the world’s largest producer of diamonds as global producers plan to increase production by 46.7%.

Mauritius:

The Mauritian market continues to struggle with the Semdex falling 0.80% last week. On the positive side turnover increased with value traded for the week amounting to $6.4m thanks to a few large crosses. The major banking stocks ended the week mixed with MCB falling 0.60% while SBM closed unchanged. There were a few large crosses in Rogers with value traded in the counter amounting to a rather pleasing $2.6m. Foreigners continued to be net sellers to the tune of $1.6m (most of which was from the disinvestment in Rogers).