African Thoughts: February 07, 2012

Globally, we have seen a distinct pick up in risk appetite. With data from the US starting to come out more positive, we are definitely seeing more and more positive stories and positive media coverage coming out. The only remaining issue is the Greek/euro debt crisis. As always, African markets work in their own mysterious ways especially while volumes are still lower than historical norms. However, as noted in the previous week, we are without a doubt seeing more and more clients willing to work orders which is a pleasing change after the past few months. This for us always indicates investors getting more comfortable with participating actively again.

As expected, with global markets having a positive week, South Africa and the closely correlated Namibia were top of the charts for last week as they followed the global markets north. The markets finished off January on the same positive trend.

Botswana:

The main story from last week was the newly listed retail outfit Choppies, which was still finding demand from investors who didn’t get enough stock in the IPO. The name was the biggest gainer, closing up 16.13% at 180t for the week while Discovery was the other big gainer, closing up 15% at 1,150t. The DCI had the first positive close for 1 week for 2012, closing the week up 1.02%. Sefalana also released 6month results to 31 Oct 2011, which were fair and showed a 6.2% growth in revenue. This growth was largely in line with inflation while profit for the period rose by a pleasing 20.9%.

Malawi:

Illovo was up by Mwk5 on the back of high demand with the demand continuing into this week. FMB and NICO also had a positive week to Mwk7 and Mwk12 respectively which also contributed to the strong weekly performance. As always in Malawi, liquidity is a major concern for investors due to low institutional participation as well as the absence of foreign investors. Part of the reason for this is the primary bond market wherein the government is trying to raise Mwk30bn.

Morocco:

Interesting week in Morocco with almost all sectors up for the week. Maroc Telecom had a good week, closing up 3.4% and as it is such a large proportion of the index this will inevitably pull the index higher. Some cyclical sectors were also up, viz construction +3.9% and industry +5.1% so it does appear as if some large investors are taking a more positive view to the economy.

Zimbabwe:

Both indices closed up with Ind +1.81% and Mining +2.26% for the week. Mining was driven by RioZim (+33% on back of reports Old Mutual and unnamed European investors would inject up to $35mill into the troubled miner) while the Ind index was helped higher by gains in Hippo, Delta and Old Mutual with Econet and Delta once again dominating trading.

Some bad performers:

Zambia:

The LuSE closed down 1% for the week. The major movers down were FQM (-12.79%, the name was up 14% on 25 January which was the only previous time the name had traded this year so just seems to be a drop back) while Zambia Sugar was down 7.04% and continues to soften as it has done for most of the year.

Mauritius:

Mauritius has had a tough start to the year. Last week it was only marginally down but for 2012 the Semdex is down -2.9% and the Sem7 -2.3%. Banks (MCB +60bps, SBM -1.9%) were down 30bps and Hotels +3% for last week.

Kenya:

Nairobi saw a distinct drop in foreign activity from 69% to 52% of total market activity from the previous week while total market activity also dropped over the same period by about 60%. Without any specific news out the market was somewhat soft on the back of low activity and low foreign activity. In other news, KNAL issued a profit warning and dropped from kes20.25 to close the week at kes18.95.