African Thoughts: June 17, 2013

Risk aversion was still very evident last week across developed markets. Africa was no different with the majority of markets on the continent coming under severe pressure. It must however be said that this sort of move was not unexpected after what has been a rather spectacular first half of the year so far. As per usual we take a look at some of the best and worst performances across the continent from last week.

Zimbabwe:

The Zimbabwean market ended the week mixed last week with the industrial Index gaining 0.34% while the mining index fell 0.52%. Delta and Econet completely dominated activity last week and accounted for a combined total of 57% of turnover as foreigners dominated activity in the names. Penny stocks continued to dominate gains with the likes of General Beltings, Barclays and pioneer leading the market higher. There was some profit taking in Delta with the counter closing the week 3.23% lower while Econet gained 1.4%. OK Zimbabwe released full-year results which saw revenue increase 16.3% to $480m.

Egypt:

The market witnessed a panic last week lead by notable selling from local (institutions and retail) investors to close the lowest close since June 2012, leaving the EGX30 to end the week down 8.10%. The market continues to trade on weak volumes yet a slight improvement to recent average turnover. The panic was triggered by the MSCI announcing that it “may be forced” to consider excluding Egypt from its emerging-market indexes “were the situation on the Egyptian foreign-exchange market to worsen and result in the inability of international investors to repatriate their funds”, adding to this growing fears regarding the political and economic instability in country with increasing calls for a massive protest on the 30th of June. The panic was led by local investor’s notable selling the market targeting all local blue-chips names such as ESRS, ETEL, HRHO and OCDI.

Nigeria:

The much anticipated profit taking in Lagos finally occurred last week after a rather stellar run with Banks (-7.23%) and consumers (-7.05%) put severe pressure on the market as the ASI closed the week -5.85% lower. The move lower was on very solid volume with Financials accounting for 46% of activity on the week. PZ Cussons (-15.06%), Guaranty Trust Bank (-11.67%) and Nigerian Breweries (-11.51%) were amongst the biggest losers for the week. From an activity point of view there was a massive cross in Dangote Cement last week Monday with 257m shares changing hands at a substantial discount to where the counter was trading on the market in a pre-arranged deal. It will be interesting to see if the sell-off continues this week, but one does however get the feeling that last week was a bit overdone and it would not be surprising to see some buying interesting coming in at these lower levels.

Kenya:

The Kenyan market extended its losses last week with the NSE 20 Index falling 3.1% as large caps came under increasing pressure while turnover fell 47% to $30.96m as foreign investor inflows fell 61.9%. Safcom was the most active counter in Nairobi, accounting for 19% of volume while the teleco closed the week 2.8% lower at KES 7.00. Banking stocks KNCB and EQBNK were the major drags on the market, falling 6.7% and 7.2% respectively while EABL also dragged the index lower, falling 8.1% to KES 340. BAT however managed to buck the trend and gain 5.7% to close at KES 577 on the back of foreign cross. Kenya Airways reported FY 2013 results which saw a loss of KES 7.9bn compared to a profit of KES 1.7bn a year earlier. The national treasury presented its budget last week and estimated that 2013 growth would be 5.8% and rising to over 7% in the medium term.

Mauritius:

The Mauritian market closed the week lower with the Semdex falling 0.50% to close at 1,926.17. MCB was the major drag on the index with the banking giant falling 3.1% to close at 189.00 closed flat at 1.04. Air Mauritius released FY 2013 results which saw a loss of EUR 2.5m and announced that management is confident that the national airline will return to profits in the next financial year.