African Thoughts: June 25, 2012

With world markets ending the week mixed last week Africa seemed to follow suit with some good and bad performances across the continent, the week was however highlighted by rather thin volumes. While world markets continue to hang in limbo as to a clear direction from the European Union investors in Africa are seemingly happy to sit and wait on the sidelines. Below is a list of the best and worst performing bourses on the African continent from last week.

Tanzania:

Tanzania was the strongest market in Africa last week with the All Share index gaining 9.3% to close at 1,433.60. The banking sector performed exceptionally well thanks to gains in CRDB (+4.4%) as the name managed to recover from a recent dip on decent volume as well (accounted for 89% of volume in the banking sector) as institutional investors sought to pick up the stock at low levels. NMB also put in a solid performance and managed to gain 1.1% as some foreign demand returned to the counter. TBL was another good performer and managed to gain 3.4% as local institutions looked to purchase the stock.

Nigeria:

Nigeria was relatively strong as the ASI managed to close the week in positive territory and gained 1%, this was however achieved on very thin volume as most foreign participants were absent. Big news last week was the announcement by the Nigerian Stock Exchange (NSE) that Aliko Dangote has been appointed as the new president of the NSE and that Ibrahim Bello the new director general and they both vowed to restore investor confidence. On the economic front inflation figures released for May saw the headline number fall from 12.9% in April to 12.7%.

Kenya:

Kenya put in a decent performance last week with the NSE 20 Index gaining 0.30%. Volumes improved slightly but foreigners remained notably absent as local institutions dominated trading. The little foreign interest that there was in the market was mostly focused on East African Breweries as the name accounted for a large portion (27%) of turnover last week. Centum released results which saw FY 2012 EPS fall 48.1% to KES 1.79. Kenol Kobil issued a profit warning after suspension on the trading of its shares was lifted. The World Bank said in a statement that it expects Kenya’s current account deficit to hit 15% of GDP.

Egypt:

Egypt took an absolute beating last week and was the worst performing market on the continent with the EGX 30 falling 8.63% on rather dire volume as the country waited in bated breath for clarification on the election results. Mohamed Morsi of the Muslim Brotherhood was declared the first president post-revolution with over 13 million votes. The market seems very pro this result and glad to see some finality with regards to the elections as it rallied 3.34% on Sunday and is currently up 6% (at the time of writing). As is always the case with a new regime only time will tell if the new Morsi government says and does the things that are in the country’s best interest, but for the time being the Egyptian people are just happy to have a new leader and the situation in the country has stabilized quite considerably.

Zimbabwe:

The Zimbabwean market closed the week lower with the Industrial Index falling 1.34% while the Mining Index fell 0.09% on fairly average volume. CBZ was the major drag on the market with the counter falling 28% on the back of investors taking some decent profits after a good run in the name. AICO also came under a fair amount of pressure after the government announced that they will set the price for buying cotton grown in the 2011-12 season following a dispute between growers and merchants regarding the price. The annual rate of inflation fell slightly from 4.03% in April to 4.02% in May.

Zambia:

Zambia closed the week lower with the All Share Index falling 0.80% to close at 3,862.42. Cavmont Capital was the major drag on the index and fell 20% while heavy weight Zambia Sugar fell 8.7%. Pamodzi released FY results which saw EPS increase to ZMK 43.32. Zambeef released H1 numbers with a loss of ZMK 13bn (profit on ZMK 23bn H1 2011) as a result of the tax liability imposed by the ZRA.

Mauritius:

Mauritius ended the week in the red with the Semdex falling 0.50% driven lower by hotel stocks as NMH and Lux Island Resorts fell 2.9% and 1.5% respectively (lowest levels since February 2009), Sun Resorts also closed lower and fell 1.1%. On a slightly positive note the two major banking stocks MCB and SBM ended the week unchanged. Omnicane announced that they will increase their stake in The Real Good Food Company by 20%. Tourist arrivals for May rose by 4.7% to reach 71,396.