African Thoughts: June 18, 2012

Volumes continue to be thin across all our markets as it has been for the past couple of weeks as all eyes are still focused on the Euro debt problems and more pertinently on the Greek poll over the weekend. As much as some investors may deny it, Africa is very much dependent on global risk. Whenever volumes are incredibly low it makes it very difficult to make accurate assumptions and generalizations about which markets have done well/badly in the previous weeks. Egypt is closed today due to the Presidential elections although early indications are that the Muslim Brotherhood is the likely victor with approximately 51% of the votes.

In terms of the better performing markets:

BRVM:

BRVM (Comp +2.04%): The West African combined bourse was the best performing on the continent driven higher by Bernabe (+26.4%), Sivoa (+17.2%) and CIE (+15%). The agro-processing sector also closed up well (+1.92%) driven up by Palm CI (+8.6%) and SAPH (+4%).

Zambia:

ZAMBIA (All Share +55bps): A quiet week in Lusaka with Lafarge the most active of all accounting for 24% of the weekly volumes. The trend of a lack of foreign interest in the LuSE continues. Zambia Sugar was up 10% for the week. ZamSugar released results 2 weeks ago which reflected profits up 316% and a dividend of K3.50 was declared (increase of 90% from previous divvy declared).

South Africa / Namibia:

SOUTH AFRICA/NAMIBIA: As usual, Namibia tracks SA and SA tracks global markets. With the Dow up 1.7% for last week and most major indices also marginally up we saw the JSE also trade up, although once again we saw volumes below average.

Kenya:

KENYA: Volumes in Sub Saharan Africa’s 2nd largest market was also low last week despite some foreign buying interest. Most of the action centered on specific large caps with crosses going through in these names, foreign interest mostly on the Buy side. Pan Africa Insurance (rumour that a controlling shareholder looking to acquire significant block) and Mumias Sugar (could launch an ethanol plant which would mean a capital tax allowance which would boost yearly profits ahead of June year end) both had good weeks on speculative interest. In other news, beer and wine prices will now change every 3 months starting July 2012 as the Treasury seeks to boost the coffers with a bigger cash contribution from the alcohol makers (keep eye on EABL on back of this news). The banking sector again dominated vols accounting for 49% of the week’s volumes. Equity Bank in particular found demand from foreign investors with the name closing up 7.4% at KES21.75 while KNCB closed up 1.1% at KES23.25

Nigeria:

NIGERIA: Volumes in Lagos were also dire although boosted by a large cross in the usually very illiquid Law and Union Insurance on Friday. Outside of this, volumes struggled to even reach the $10mill mark each day. The NSE30 closed the week up 1.25% while in the individual sectors we saw BNK10 (-0.83%), INS10 (-2.45%) and Oil/Gas5 (-4.97%). In general, it was a very uneventful week in Nigeria. Dangote Cement closed the week up 5.7% at N108 after news of their factory expansion was commissioned. DangCem is ¼ of the market cap of the NSE, although volumes in this name are typically light.

And some of the worst performers for last week:

Mauritius:

MAURITIUS: The Semdex closed the week down 30bps while the Sem7 closed down 10bps. Continued uncertainty over the Eurozone worries investors into the Mauritian exchange, in particular foreign participants who were net sellers. In the banking sector MCB closed the week unchanged at Rs168 while SBM closed down 60bps at Rs82. Hotel names continued to fall with NMH (-1.4%, Rs69) and Sun Resorts (-1.1%, Rs37.50). Air Mauritius had an incredibly poor week closing down 10% at Rs10.50 after posting a loss of Rs1.1bn for FY12.

Morocco:

MOROCCO: Relatively quiet week with the foreign selling action on IAM MC the main drag on the exchange. IAM started the wee tar 114.40 yet closed the week down 5% at 108.60.

Zimbabwe:

MINING (-1.09%): Once again RioZim (23% of Index) was the driving force of the index. RioZim closed down 11% as their debt woes continue to pose serious operational challenges.

INDUSTRIAL (-91bps): The main Harare index closed down 91bps for the week driven down by the large caps Delta (-3%) and Econet (-1%) as we saw some profit taking on these names.