African Thoughts: February 18, 2013

We saw African markets mirror the rather uninspiring week across global equity markets with no real standouts in terms of performance, good or bad. Today is a US holiday and hence we expect a quiet start to the week. Below are some comments on a number of the markets we cover.

Zimbabwe:

Both Zimbabwe indices were the worst performers in Africa with the Mining index (-6.71%) by far the worst while the Industrial index slid by 1.1%. Despite this, both indices remain very strong YTD (Mining +18.9%, Ind +19.39%). We believe the reasons for the soft week is from a combination of profit taking as well as a slight retreat in demand. A pause after such a rollicking start to 2013 is not surprising. Interestingly, volumes were much improved after a large block in Econet (the name accounting for 45% of the weekly turnover). Dairibord also witnessed some chunky volumes to close as the second most traded stock.

Botswana:

The Gaborone bourse inched up by a mere 12bps for the week as a number of stocks reaching 12 month highs. Letshego rose by 2.44% to 210t while all retail counters also reached their 12 month highs: Furnmart +2.94%, Choppies +1.32%, Sefalana +1.09%.

Kenya:

An increase of just 60bps on the NSE 20 as profit taking took place across some of the large caps as foreign participation level increased to highest level for the year thus far. A number of chunky crosses in EABL meant the name was the most active name for the week despite slipping 3.9% for the week after posting weak 1H13 numbers. KCB gained an impressive 4.2% for the week as the name is now 24.4% up for 2013. KCB is due to release the Fy12 results in the coming weeks and investors are clearly expecting strong results. BCBL also released results, and closed down 1.8% to KES16.15.

Mauritius:

Both indices closed up for the week with the Semdex +1.8% and the Sem-7 +1.7% with the week marked with the release of quarterly results of several companies. After some solid results, MCB gained 60bps to close at Rs180 while SBM gained 1.6% to close at Rs97. In the same sector, Bramer Banking slid by 3.4% to Rs7. In the hotel segment, all the companies posted good performances. NMH drove the sector, closing up 7.6% at Rs77.50 (its highest level in 12 months) while Lux Island Resorts and Sun Resorts rose by 4.7% and 3.9% respectively. Air Mauritius continues to run, closing up 5.9% at Rs14.30.

Egypt:

The market traded with a mixed sentiment Sunday to end the week up 0.22% on very weak volumes. The market continues to witness mixed sentiment considering the lack of triggers with local retail targeting small/mid caps, international institutional investors continue to be net sellers in the market targeting names such as OCIC and ESRS and COMI. QNB submitted the tender offer for NSGB Shares at 38.65, yet many investors started to sell the name at near 37.90 level which is offering less than a 2% upside from the deal price doesn't justify the currency risk. OCI announced last week that minority shareholders attending the OGM and EGM approved all resolutions with 99.99% voting favorably. As per EFSA’s request, the Sawiris family, Abraaj, and shareholders who have agreed to swap into OCI N.V. have all agreed to abstain from voting on the offer. The resolutions pertain to: 1) the exchange offer and the MTO offer, with a cash alternative, 2) the equalization agreement in case significantly more than 5% of shareholders do not tender their shares in the MTO, 3) cancelling the previously proposed demerger into the fertilizers and construction segments, 4) the continuation of the ESOP, 5) Regarding the GDR program, the company will monitor its liquidity and take the decision to either cancel or maintain the program accordingly.

Francophone Region:

A very marginally positive week for the BRVM indices while both the BRVM Comp and BRVM 10 are up more than 9% YTD. The biggest driver of last week’s outperformance was the Tobacco sector (+10%, with SITAB +10%). The transport sector (+6.83%) and agro-processing (+5.12%) were also strong while Sonatel fell by 2.97% to drag down the telecoms sector by 1.5%.

Tanzania:

Both the DCEI (+65bps) and the TSI (+2.83%) closed in the green for last week as activity levels also showed signs of life, most of this driven by local investors. CRDB gained 3.23% to Tshs160.