African Thoughts: February 11, 2013

African markets have gotten off to an absolute flying start in 2013 with last week proving no different as the general trend was market strength, as foreigners continue to seek exposure to the potential high returns that Africa has to offer. African markets outperformed their developed market peers last week as the general trend was weaker in the developed world. As is usually the case we take a look at the best and worst performing markets from across the continent for last week.

Kenya:

The Kenyan market was the best performing bourse on the continent last week with the NSE 20 Index gaining 3.8% and achieved on rather robust volume of $46.4m (for the week) as foreigners dominated activity. Athi River Mining was the major driver behind activity as foreigners dominated both sides of the counter (there was a rather large cross that went through on Thursday with foreigners on both sides). The treasury has raised this year’s borrowing target by KES 31.6bn due to a decline in tax collections. PayGate, the South African payments solutions provider has linked up with M-Pesa to provide an e-commerce solution for subscribers in Kenya and Tanzania.

Nigeria:

Nigeria’s stellar performance continued last week with the ASI gaining 2.78%. The performance in banking stocks continue to drive the market as speculation is rife that results will beat the majority of estimates. The Bank Index gained 3.40% last week and has rallied an unbelievable 21.73% year-to-date. Last week directors of Zenith Bank recommended a 30% increase in dividends which is now subject to approval by the CBN alongside the company’s results. Flour Mills announced that they will start refining sugar this month in order to boost revenue as construction of the 750,000 metric ton capacity plant was completed in December 2012. The Oando Rights Issue was extended due to an industrial action of Pensioners of the Nigerian Postal Service in January 2013, as this disrupted the distribution of rights circulars to the majority of Oando's shareholders.

Zimbabwe:

The Zimbabwean market experienced mixed fortunes last week with the Industrial Index gaining 1.10% (taking the rally for the year-to-date to 20.72%). The Mining Index fell 1.27% lead lower by RioZim as troubles at their gold mining concern Renco Mine continued. From an activity point of view it was the usual suspects in the form of Delta, Econet, Innscor, Dairiboard and CBZ that dominated trading. Smaller caps however played catch up in terms of performance last week and outperformed the blue chip counters as the likes of NMB and TSL gained 53% and 15.4% respectively. Econet announced last week that the board of directors has approved a proposed ten for one share split in order to make the stock more affordable for smaller investors.

Mauritius:

The Mauritian market put in a rather solid performance last week with the Semdex gaining 1.0% to close at 1,819.09. Blue chip counters in the form of State Bank, NMH and Alteo were all drivers behind the move higher as foreigners continue to seek exposure to the more liquid names. Mauritius Commercial Bank was however the driver behind activity as foreigners were dominant on both sides of the counter. IBL released interim results last week which saw PAT increase 21% and announced that they have entered into a public-private partnership with the Republic of Gabon which will capitalize on the group’s know how and expertise in the seafood and marine industry.

Tunisia:

On the negative side, Tunisia was one of the worst performing markets on the continent with the market falling 3.3%. Violence has returned to the country with Tunisians back to marches on the streets in order of protests. There was a sense of “déjà vu” last week after the assassination of one of the major leading figures in the opposition, Mr Chokri Belaid. All in all, international investors are content to sit on the sidelines or take money off the table until the situation in Tunisia calms down.