African Thoughts: February 25, 2013

The developed world had an up and down week last week but eventually ended in positive territory (for the most part) even after the UK’s credit rating was downgraded. There have been reports that equity flows are still positive in the developed world which once again reflects the positive sentiment surrounding the asset class for the moment. Africa put in a good performance last week, but there were pockets of profit taking in a few of the markets in our universe. As is usually the case we take a look at some of the best and worst performing markets across the continent.

Zimbabwe:

The Zimbabwean market put in a good performance last week and was the best performing bourse in Africa with the Industrial Index gaining 2.56% while the Mining Index gained 3.94%. There seems to be quite a bit of confidence in the market after the announcement that the referendum will take place in March which should pave the way for an election later this year. This news has also helped boost the inflow of funds from international investors significantly. The move higher last week was largely driven by the blue chip counters as the likes of Econet (+3.85%), Delta (+2.04%) and PPC (+2.04%) all put in strong performances. Looking forward to this week we see the start of the earnings season with CBZ kicking things off on the 26th.

Mauritius:

Mauritius is another market that continues to impress with the Sem-7 gaining a rather satisfactory 2.0% last week taking the YTD move to +9.5%. The move has however been driven by only a handful of stocks with the likes of MCB, SBM and NMH being the primary contributors as foreigners continue to seek exposure to the bigger names on the Island. On the economic front unemployment is currently at 7.9% while GDP is forecast to grow at 3.7% in 2013.

Nigeria:

The Nigerian market was driven higher by market heavyweight Dangote Cement which closed Friday 8.85% higher, but this should however be taken with a pinch of salt as there was a small print of 10k shares early on at 160 and the name traded lower all day after that, but due to the 10k rule the price did not change after that. The All-Share Index put in a solid performance and gained 1.91% for the week while the consumer sector gained 0.78%. Banking stocks continued to drive activity as the sector accounted for 59.98% of total value traded. There were a few big names that released results last week with Nestle reporting FY 2012 numbers which saw PAT increase 28.13% while Nigerian Breweries reported a fall in FY 2012 PAT of 0.02%.

Kenya:

Profit taking was very evident in Nairobi last week as the Kenyan NSE 20 Index was the worst performing market on the continent, falling 3.0%. On the positive side turnover increased 6% to $40.62m for the week. East African Breweries continued to drive activity and accounted for 30% of volume on strong foreign investor demand. Safaricom reversed its bearish trend, gaining 2.7% buoyed by strong foreign investor demand as well. Banking stocks KCB and Equity bank continued to witness profit taking, easing 1.4% and 4.5% respectively ahead of FY12 performance figures announcements expected in the coming weeks. NIC Bank posted FY 2012 earnings which saw EPS increase by 8.2%. Uchumi posted a 35% decrease in PBT for 1H13 over the weekend.

Egypt:

The Egyptian market traded with a mixed sentiment to end the week in negative territory, leaving the EGX30 to end the week down 2%. Market volumes were very weak, the market managed to trade record low volumes, as it 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. OCDI grabbed local investor interest after news that CRC Granted SODIC 3 Years to Develop Eastown.

Tunisia:

The Tunisian market followed its North African counterpart lower with the Main Index falling 0.9%. Standard & Poor's downgraded Tunisia's government credit rating due to the persistent political instability in the country. The move on Tuesday was the latest blow to the country's economy, which has been suffering since Tunisians overthrew their dictator in January 2011, as well as due to Europe's financial crisis. S&P lowered Tunisia's rating to BB- from BB with a negative outlook. It is the third such downgrade since the uprising. In justifying its move, the agency cited the ongoing political crisis in the country following the assassination of leftist politician Chokri Belaid on Feb. 6. Tunisia's political parties are in negotiations to form a new government after a proposal by Prime Minister Hamadi Jebali to form a technocratic cabinet was rejected Monday.