African Thoughts: January 21, 2013

The three best performing markets in our universe last week happened to be the 3 most liquid markets (ex SA and Egypt). These markets are Nigeria, Kenya and Zimbabwe, in that order. This tells a lot as it shows that money is still flowing in to the asset class, and investors are focusing more and more on the liquid markets and paying less cognizance to the peripheral markets (like Ghana and Zambia). Globally we are still in a risk seeking state, and this always is positive for African markets.

Zimbabwe:

A gain of an impressive 3.44% for the Industrial index while the Mining Index grabbed onto the shirt tails and closed the week up 1.22%. Strong foreign demand for the blue chip names were the main driving force behind the outperformance with Delta (+5.76%, 114.3c), Econet (+5.37%, 520c) and Innscor (+3.95%, 79c). These 3 names account for over 50% of the Ind Index and are thus influential in the performance. The resource sector gained 1.22% mostly due to Bindura (+5.26%, 2c).

Foreign buying has accounted for 68% of all purchases thus far in 2013. The index has also had 12 straight positive sessions. A strong reason behind the Delta outperformance was the announcement of the Q3 trade update which showed revenue up 14% for the quarter and 16% up year to date. Econet also updated the market on its subscriber numbers – Econet has now surpassed 8mill subscribers while their mobile money transfer service surpassed 2mill subscribers by end of Dec 2012.

Nigeria:

Friday saw the strong Nigeria sentiment continue, the ASI up 1.99% on Friday alone whilst up 5.91% for the week as every session closed in the red. The ASI is now up 10.14% for the YTD. Every sector also performed impressively for the week, the most notable being Oil and Gas (+7.12%) , Consumers (+4.31%) and Banking (+3.34%). Despite the strength in the consumers, Unilever was among the worst weekly performers closing down 5.19% for the week at N43.99.

BRVM:

A good week for Petroleum (+9.59%), Tobacco (+2.86%) and Telecoms (+2.71%) the main reasons for the +1.27% return on the BRVM market last week. In Petroleum, SMB recorded am impressive +33.46% to lead the sector higher while Sonatel gained 6.67% to lead the telecoms to a solid week. Agro-Processing was the main drag (-3.92%) with SOGB (-7.5%) pulling the sector down.

Kenya:

Despite a weak close on Friday the NSE had a solid week. Overall the NSE20 rose by 3.5% for the week while turnover saw a decent improvement. Interestingly, foreign participation was lower for the week. Having said that, EABL was driven by foreign investors and thus the most actively traded stock on the bourse (22% of the weekly turnover, name closing up 0.3% at KES295). Safcom also saw foreign demand pushing the name and closed up 2.7% at KES5.75. The normally illiquid Bamburi Cement closed up 5.1% at KES205 on decent volume.

Mauritius:

The Semdex closed up 1.7% for the week while the Sem-7 closed the week up 2.2% as demand for the blue chips continue on decent turnover. As always, MCB is a big focus and closed the week up a tidy 2.3% at Rs180 on strong foreign demand while SBM gained 2.2% to close at Rs91.50. Hotel stocks also had a pleasing week – NMH +2.3%, Rs67 (already up 18.6% YTD), Lux Island Resorts +3.1%, Rs16.50 and Sun Resorts +1.1%, Rs28. Air Mauritius rose by 8.1% to Rs12.00. Sugar-wise, Omnicane increased by 1.3% to Rs77.00.

Botswana:

A small outperformance in Gaborone for the week (+28bps for the DCI). Large cap name Stanchart was a leader in the positive performance, closing 3% to reach a 12-month high of 1030t. Choppies and Sefalana also rose to 12-month highs of 210t and 335t respectively. Letshego also rose by 5t to 200t on some decent block trading.

Tanzania:

Gains in TBL (+7.14%) and NMB (+1.79%) impacted positively on the Tanzanian market as the DSEI rose by 48bps and the TSI by 2.12%. Foreign investors were 56% of the weekly turnover.