African Thoughts: July 29, 2013

In general we witnessed the seasonally quiet markets across the African universe. Globally we also saw not much conviction in either direction and Africa was not much different, with a couple of notable exceptions…

Please see below for a summary of a few of our markets although please bear in mind that last week was quiet in terms of market activity as well as news flow.

Zimbabwe:

The Industrial index rose by 1.56% last week which means that the ZSE continues to soar to uncharted waters as it is now up 51.3% YTD. Rebounds in Delta and Innscor were the main driving forces behind the market strength although volumes remain light in Harare. Finance Minister Biti announced during the week that economic growth would be revised down to 3.4% (down from an initial projection of 5%). As expected, the main taking point remains the elections due to take place later in the week. All eyes are firmly focused on this.

Nigeria:

The biggest talking point in our universe last week was the weakness in Nigeria (-3%), all caused by the Central Bank’s decision to increase the Cash Reserve Requirement for banks on public sector deposits to 50%. Not surprisingly the banks got hammered (-6.4%) after the announcement with the worst affected being Zenith (-9.9%), FBNH (-8.2%), Guaranty (-6.5%) and UBA (-6.1%). The contagion dragged into the consumer sector (-4.5%) with sellers pushing the stocks lower – NB (-3.6%) and Guinness (-11.5%) notable in the sector. Also to keep in mind is the continued release of various results, last week we saw UACN, Dangote Cement, Fidelity Bank, Dangote Sugar, Skye Bank and Nestle release results. We expect more results to come out in the coming weeks.

Egypt:

Mixed sentiment dominated the landscape last week although the week ended slightly higher, leaving the EGX30 to end the week up 11bps Market volumes were within recent average turnovers. The unrest continues to be an overhang on the market especially after clashes escalated over the weekend. Investors ended the week with a negative sentiment lead by notable profit booking from retail investors, this coming on the back of a growing fear of escalation after the Defense Minister’s speech where he called for Egyptians to go for a mass protest next Friday to give him the required legitimacy to face terrorism. Local retail investors were the major sellers last week this comes after weeks of being net-buyers, names such as PHDC, OCDI and CCAP. It’s worth mentioning that the market started last week with a decent bid after news that the UAE has transferred USD3bn aid package and that USD2bn is expected from Saudi shortly which is expected to stabilize the NIR’s and give much more room for the government to recover from its economic woes.

Kenya:

Turnover remains light in Nairobi as both foreign and local investors much quieter than normal although the market remains fairly stable. Foreign investor activity was down 47% from the previous week. This coming week also sees the start of banks’ earnings season (Equity Bank has already released results this morning).

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.

Francophone Region:

The BRVM slipped by a marginal 21bps last week, mostly due to Sonatel weakness during Friday’s session. Sonatel traded in chunky volumes throughout the week at the 18,900 but on Friday it slipped to 18,700 on light volumes.

Tanzania:

Chunky activity in CRDB pushed volumes in Dar to very good levels. 99% of the week’s activities took place in CRDB as the stock rose by 8.33% to TZS325 and thus leading the banking index higher by 2.13% for the week.