African Thoughts: March 25, 2013

Last week saw global focus on the Eurozone with the issues in Cyprus taking centre stage. As such, investors were slightly nervous as to how this would filter through into our African universe. Coupled with the strong performance thus far this year for most of the African indices, we saw a week of reduced activity as investors take a breath as Q1 comes to an end.

Zimbabwe:

Both indices dropped last week (Ind -2.36%, Mining -6.22%) despite the positive feedback from the referendum from the weekend where an estimated 95% voted in favour of the new constitution. Despite the fall, the mainstream Industrial index is still up an impressive 21.72% YTD. Foreign participation as well as overall volumes were muted for the week. The main causes of the drop in the Ind Index was Delta (-41bps, 122c) and Innscor (-2.32%, 83.03c). Dairibord released some earnings which were slightly below expectations and saw the name fall to 28c.

Nigeria:

The Nigerian ASI gained by 1.69% for the week, although outside of a couple of chunky crosses the entire market was very subdued. Crosses in Access, UBA and GTB were the main drivers behind these crosses and hence overall turnover. In the sector, Zenith Bank was the biggest loser after shedding 2.69% for the week. Some of the top performers for the week included Nestle (+2.02%, N860), Dangote Cement (+9.54%, N155), Wapco (+5.73%, N76) and Cadbury (+4.11%, N34.95) while some of the week’s biggest losers included Guinness (-3.81%, N265), Nigerian Breweries (-2.24%, N163.07) and PZ Cussons (-3.66%, N39.50). Some worrying news out was that the NSE intends to prohibit brokers from sharing market data with external parties. Many participants have expressed concern over this perceived removal of any transparency from the NSE – we await further clarification on this.

Botswana:

The DCI gained a mightily impressive 2.75% with the 3 largest stocks the main drivers behind the strength. FNBB reached a new 12 month high by gaining 10% to 330t. Letshego gained 4.94% to 255t as the demand for this name continues to grow and Barclays gained 72bps to 700t. Demand for Sefalana, Sechaba and Choppies continues to be strong as the names closed up 2.14%, 1.55% and 76bps respectively.

Kenya:

A soft week in Nairobi as profit taking was clear across a number of counters. The NSE 20 fell by 1.3% for the week while foreign investor activity was roughly 47% of the weekly turnover. The biggest mover for the week was AccessKenya after management announced it would be open to a potential takeover bid “at the right price”. Foreign selling on Safcom dragged the name down by about 5.7% to KES 5.80 while Equity Bank and KNCB ended the week unchanged at KES 30 and KES 38.50 for the week. EABL closed the week up 2.3% at KES 310. Nation Media Group announced strong FY12 results and thus rallied 13.8% during the week.

Mauritius:

Both the Semdex and the Sem-7 closed the week in the red as both the banks and hotels sold off. The losses in MCB (-1.5%, Rs192) and Bramer Banking (-7.8%, Rs8.26) were big reasons behind the Sem-7 fall while SBM closed unchanged at Rs1.03. The 3 main hotels stocks witnessed large activity, NMH and Lux Island Resorts closing unchanged at Rs72 and Rs17.70 respectively while Sun Resorts lost 2.7% to close at Rs27.24.

Francophone Region:

A positive week as the BRVM market closed up 39bps for the week. The transport sector was the major gainer as it improved by 7.85% and packaging which rose by 6.22%. Tobacco gained 5% mainly on the back of the 5% gain in SITAB. As always, the market is a “1-stock” market and Sonatel accounted for 97% of the weekly turnover, closing unchanged at XOF 16,000.