African Thoughts: March 05, 2012

With world markets ending the week relatively flat last week as a result of a clear lack of conviction from both buyers and sellers, there weren’t any wild swings in any of the major African bourses. There was a bit of a mixed bag with most markets experiencing relatively small gains or losses.

Kenya was the strongest market in Africa with the NSE 20 Index gaining 2.7%. Kenya Commercial Bank announced a growth of 54.54% in profit before tax which was better than the market had anticipated with the name rallying 6.5% to close the week at 21.25. Safcom reviewed its transaction fees for Mpesa in order to target the lower income market (which accounts for more than 25% of all transactions on the Mpesa platform). On the economic front inflation for February fell 1.62% to 16.69%.

The South African and Namibian markets were two of the stronger markets with both bourses gaining 1.3%. As we all know by now, the Namibian market tracks the JSE almost directly. The only major news out in South Africa was the ANC’s expulsion of controversial youth league leader Julius Malema.

Morocco also put in a strong performance with the market rallying 1.3%. Unfortunately there was not much substance behind the move higher, with most market participants expecting companies to post decent results in the upcoming weeks. Moroc Telecom reported FY 2011 results with Net Income falling 15%.

With earnings season well under way the Nigerian market put in a decent performance, the ASI gained 0.51%. Most of the activity was focused on the banking stocks (73% of activity). Dangote Cement was one of the star performers last week with the name rallying 5.0% to close at 110.25. Unfortunately there was not much in the news front as market participants eagerly await the upcoming results.

Zimbabwe was the weakest market on the continent with the Mining Index falling 3.3% while the Industrial Index fell 1.3%. Delta was the major contributor towards value traded last week (48%) with renewed foreign interest helping boost demand in the counter. Foreign purchases accounted for 63% of total purchases on the Zimbabwean market last week. Barclays posted FY 2011 results with net interest income increasing 152% to $6.1m. Indigenization minister Saviour Kasukuwere launched a verbal attack on Impala Platinum Holdings CEO David Brown , saying that he was “sick and Tired” of the mining group’s failure to comply with local black ownership laws.

The Mauritian market continues to struggle with the All-Share index falling 1.2% for the week, and reaching its lowest level of 1,773.31 on Wednesday since October 2010. Foreigners were net buyers to the tune of $406k. Tourist arrival forecast for 2012 has been revised to 980,000 from an initial estimate of 1,010,000.

Tunisia has been rather quiet of late and this week was no exception, the market closed the week lower with the MSCI falling 0.8%. Fitch affirmed the country’s long term debt rating at BBB-, stating that the political transition from the former Ben Ali regime to a newly elected interim government has been smooth. They however did comment that the economy had performed worse than expected raising concerns about public and external debt sustainability.

After what has been a rather spectacular run so far this year the Egyptian market took its foot off the pedal and closed the week slightly lower with the EGX falling 0.7%. With the lack of any substantial market news the fall can only be attributed to local investors taking some healthy profits. There was a move in Parliament by the FJP (political arm of the Muslim Brotherhood) trying to withdraw confidence from the current government and create a new coalition government.