African Thoughts: March 13, 2012

Another pretty mixed week globally with the majority of investors still focusing on the Greek swap deal with the Euro area slowdown and also some concerns about China growth unsettling investors. From an African point of view, we are definitely seeing a lot more investors happy to be involved in terms of working orders again. For a long time through 2011 investors were happy to sit on the sidelines but 2012 has definitely seen a return for many participants.

Some of the better performers:

Kenya (+2.8% in USD terms):

A good week in Nairobi with the NSE20 +2.18% for the week in local terms. Banks were once again the most active of the sectors with more than 45% of the week’s turnover coming from this sector. EqBnk announced good results which beat market consensus estimates yet the name sold off after this and closed the week at KES19.00. In other news, the CBK held its monthly meeting on Tues 6 March and agreed to maintain the benchmark lending rate at 18.0%. It was also noted that overall inflation for Feb12 came down by 1.62% to 16.69% while the shilling remained stable at KES82.65-83.93.

Nigeria (+2.1% in USD terms):

An active week in Lagos with a number of chunky crosses going through all week. We are currently in results season and this typically sees increased participation. We expect this to continue through the week as more results are expected to come out. As with Kenya, the banking sub-sector drove vols accounting for about 66% of the weekly turnover, with UBA, ETI and Zenith the most active with some notable crosses going through in these names. The NSE ASI increased by 1.7% for the week and the gainers included Mobil Oil +5%, Nigerian Breweries +5.4%, FlourMills +5.7%, Cadbury +16.7% and PZ Cussons +3.7%. Biggest losers included UACN -2.1%, Zenith -3.5%, First Bank -3.4% and UBA -11.4%. Results came out for NB and Zenith Bank during the week, Zenith came out mixed while NB came out better than consensus. The start of this week has seen a lot of focus on consumer names Guinness, NB and Nestle.

Zambia (+1.9% in USD terms):

The LuSE was up 50bps in local terms, driven up by AEL (+12.5%), Investrust (+5.6%) and Puma (+4.9%). Large cap movers included Zambia Sugar (+3.7%), BATZ (-3.13%) and Zambeef (-3.0%).

Some of the worst bourses that we cover:

Mauritius (Sem7 -1.5% in USD, Semdex -1.3%):

Both the Semdex and the Sem7 were down 70bps in local terms. Banks continued to drop slightly with MCB and SBM both down 60bps for the week closing at Rs162 and Rs78. Yesterday was a public holiday so we await what today will bring. In the commerce sector, Rogers dropped -1.3% to close at Rs300. Hotels had a mixed week with NMH +1.4% closing at Rs71 the only gainer while Lux Resorts and Sun both dropped by 50bps to close at Rs20.30 and Rs39.80 respectively. Some local research came out which predicts room occupancy rates to be down to 50-55% for 2012 (2011: 65%). Sun Resorts is due to announce FY11 results later this month. The Sugar companies had a poor week with Omnicane -2.8% and ENL -3.7% closing at Rs70 and Rs39.50 respectively.

Zimbabwe Industrial (-1.2%):

The Zim Industrial dropped by -1.25% while the Mining Index dropped by 16bps. Market turnover actually increased from $3.7mill in the preceding week to $6.5mill. The main contributors to turnover were the usual suspects - Delta was the main focus with over 52% of the weekly turnover and Econet 11% of the week’s turnover. The biggest movers on both the plus and minus side were only smaller cap names. Of the notable names to move was Seedco (-6.36%), Barclays (-9.09%), Lafarge (-14.29%) and RTG (-20%).

Namibia/South Africa (-1.1% and -1% in USD):

As with global markets, the JSE and its neighbor Namibia followed global markets with a mixed week. As earlier, concerns over China and European growth were both evident but more concerning for global investors is the focus on the Greek debt swap.