African Thoughts: July 15, 2013

The lack of liquidity due to the seasonal Northern Hemisphere holiday period did not seem to have an impact on global markets with most developed markets rallying very hard last week. African markets enjoyed mixed results last week and as per usual, we take a look at some of the best and worst performing bourses from around the continent.

Zimbabwe:

The Zimbabwean market ended the week mixed (as is usually the case) with the Industrial Index gaining 4.09% while the Mining Index fell 4.54%. On a positive note, turnover increased by 100% to $8.95m thanks to renewed foreign and local interest in blue chip counters. Foreigners were net buyers in the likes of Econet and OK Zimbabwe with a number of crosses taking place in the counters throughout the week. From a performance point of view it was the retail sector (+11.51%) and the banking sector (+7.86%) that drove the market. As the much anticipated elections draw ever nearer it will be interesting to see how global investors position themselves with regards to their Zimbabwean exposure. We are expecting a rather cautious approach until the elections have passed.

Kenya:

The Kenyan market managed to bounce back last week after a rather poor run with the NSE 20 index gaining 2.9%. Another positive sign was the fact that turnover also increased 40% to $37.46m, driven by both local and foreign investors. After announcing that they had increased their beer prices by 7.6%, EABL gained a rather impressive 5.5% to KES 343 and accounted for 26% of last week’s volume. The likes of Safcom, Kenya Commercial Bank and Equity Bank were also very active and enjoyed renewed interest from foreigners. Athi River Mining put in a very good performance and managed to gain 9.4% after announcing 27.2% increase in H1 2013 EPS. The Monetary Policy Committee maintained the Central Bank Rate at 8.5% last week, indicating the need to balance between a stable Shilling as well as spurring economic growth.

Nigeria:

The market enjoyed a rather solid performance last week in Lagos with the ASI gaining 1.24%. Banking stocks (+1.34%) were the main drivers behind the market’s performance while Consumer stocks (+0.75) also put in a good performance. It was extremely quiet from an activity point of view for the entire week with volumes very much skewed towards the odd large cross here and there. One cross in particular that caught most market participants attention was that of $25m worth of UBA with both the buyer and the seller being local. Banking stocks also dominated from an activity point of view and accounted for 78% of volumes while Consumer stocks only accounted for 5% of turnover.

Mauritius:

The Mauritian market continued to come under pressure last week with the Semdex falling 1.8% to a 20 week low of 1,860. On a positive note, MCB managed to find some support and gain 0.5% for the week to close at 181.50 while SBM closed unchanged at 1.02. Hoteliers had another bad week despite the Emirates announcement that it will replace its existing Boeing 777 with the A380 on its daily MRU-DBX flight starting December 16th 2013. Tourist arrivals for June 2013 increased 0.7% to 55,007 visitors with the number of visitors from China increasing 105.5% to 2,908 visitors.

Egypt:

After a solid bull run, locals turned to profit taking for the most part last week, especially the last of day of the week as political Islamist groups continue to call for protests against the army; the EGX 30 fell by 0.61% to close at 5,276.73 points. At current levels, locals are taking their foot off the gas to see how the next few days pan out; volumes were lower relative to recent trend as the market traded. International institutions remain bearish and continue their record of net-selling, weighing down on the likes of JUFO, HRHO and COMI it’s worth mentioning that PHDC was one of the few names that managed to trade against the general sentiment; PHDC continues to be a favorite for retail investors who accounted for 77.82%.