African Thoughts: July 08, 2013

Global markets had a truncated week with the US holiday last Thursday. As such, African volumes were lighter than normal which always makes it difficult to gauge proper market sentiment. Market performance was mixed for the week, most notable of course being the outperformance of Egypt. Please see below for a brief summary of our universe.

Zimbabwe:

The Zimbabwe Industrial Index gained 1.06% for last week with the rally being mostly attributed to the decision by the Constitutional Court to uphold the election date of 31 July 2013. The Ind Index is now up a storming 40.05% YTD as demand for the market heavyweights continues to fuel the rally – Econet (+61bps), Delta (+71bps), Innscor (+3.27%) and Old Mutual (+2.81%) leading the charge. Volumes were incredibly light for the week though as foreign investors are mostly adopting a wait-and-see attitude towards the elections. On the other hand, the Mining Index fell by 4.33% as Bindura and Hwange lost 5.45% and 8.57% respectively.

Nigeria:

General market trading was very muted last week which was to be expected with the US holiday while demand was strong across every sector as the ASI closed up 2.11%. Overall volumes looked reasonable though as some cross trades in the normally illiquid stocks IHS and Transcorp spiked volumes. As mentioned, all sectors gained for the week with Banks (+3.1%) and Consumers (+1.99%) both showing strong demand throughout the week.

Egypt:

A massive week last week as the index gained more than 11%, although the last 2 days have shown a reversal as the political situation still remains tense, currently down more than 2% today alone as all selling is international. Last week showed the positive side of the local sentiment that the expected cabinet formation, along with the overall euphoria. However, the escalation started to hike between the army and the ex-MB President’s supporters which has left more than 30 dead and hundreds injured. This is causing further tension with Islamic political groups including Al-Nour party who withdrew from all negotiations with the current regime.

Kenya:

The Nairobi Top 20 index lost 30bps for the week as foreign participants were net sellers for just the second time in 2013. The most active stocks for the week were the usual suspects including Safcom (+3.1%, KES6.75), Equity Bank (+2.4%, KES32) and KNCB (+3.4%, KES38.25). All these names have shown impressive gains for the year to date. Economic news out showed Q1 growth in 2013 of 5.2% (2012: 3.9%) which is the fastest quarterly growth since Q4 in 2010.

Mauritius:

Both the Semdex (-1.1%) and the Sem-7 (-1.4%) lost ground last week although both indices are up around 9% YTD. The weakness in the large cap stocks were the real driving force behind the soft sentiment in the market. In the banking sector, MCB fell by Rs1 to Rs184 (-1.1%) while SBM lost 1% to close at Rs1.02. Other Sem-7 stocks Alteo and Terra both slipped by 1.7% to Rs35 and Rs40.80 respectively. The hotel sector also struggled with Lux closing unchanged at Rs22 while NMH and Sun Resorts fell by 70bps and 1.4% respectively.

Tanzania:

Mostly local action in Dar for last week as the ASI lost 8 bps while the TSI gained 33bps. Most of the week’s action took place in CRDB (-3.57%) which announced their Q1 results today.