African Thoughts: May 21, 2012

With world markets falling off a cliff last week as a result of severe problems in the Euro zone and general risk aversion, it was very evident that volumes across the African continent dried up quite substantially. There was however some decent performances which saw Africa generally outperform the developed world.

Kenya:

Kenya was the continents best performing bourse with the NSE 20 Index gaining 2.8%. Kenya Airways put in a stellar performance last week after Virgin Atlantic announced that they will be cancelling their Nairobi/ London route (and with that a 30% share of the market on the route). Kenol Kobil posted a statement on their website further clarifying Puma Energy’s intended takeover bid for the company, stating that minority shareholders should receive the same deal price as majority shareholders. On the economic front it was announced that 2011 GDP slowed to 4.4%, down from 5.8% in 2012.

Mauritius:

Mauritius put in a solid enough performance last week with the Semdex gaining 1.2%. SBM announced plans for a share split of 100 to 1 as well as releasing solid 9 month results and the news seemed well received as the name gained 4.3% for the week to close at 83.50. On the economic front tourism arrivals from January to April fell 0.2%. Unemployment figures for 2011 came in at 7.9% as compared to 7.8% for 2010.

Malawi :

Malawi managed to close the week in positive territory with the market gaining 0.3%. It seems that the new President Mrs. Banda has been saying and doing the correct things thus far as there has been a growing interest from both local and foreign institutions in Malawi. NBS has been the market leader of late from both a value traded and price point of view with the counter gaining 7.8% last week.

Zimbabwe:

Zimbabwe was a mixed bag once again with the Industrial Index performing rather well and gaining 1.13% while the Mining Index was rather dismal and fell 5.80%. Econet was one of the star performers last week and managed to gain 3.45% to close at 4.20. The name has been rallying ever since the release of their full-year numbers which was obviously very well received. Rio Zim was the major drag on the Mining Index with the name falling 9.9% to close at 0.45. The counter has been affected negatively by the news that Gem Raintree which was the underwriter in their rights issue was not compliant with the Indeginisation laws. Zimbabwe’s trade balance for Q1 came in at -$889m as a result of the country’s continued dependence on imports.

North Africa:

North Africa came under some serious pressure last week with two of the continents worth performing markets coming from the region. Egypt closed the week lower with the EGX 30 falling 5.7% albeit it on rather thin volumes. Foreigners were net sellers on the back of both global risk aversion and the increased anxiety ahead of Wednesday’s Presidential elections. The general feeling is that the elections will be very close between the top four candidates (Aboul Fotouh, Moussa, Morsi or Shafiq), which consist of two Islamists and two Liberals.

Morocco:

Morocco also came under the whip with the market falling 5.2%. The fall was largely attributed to the fall in IAM with the counter falling 4.9% to close the week at 122.6. IAM has been falling ever since the re-weighting of the MSCI Index, and as we all know by now, IAM is the biggest stock in Morocco by quite some distance.

Nigeria:

There was continued profit taking in Nigeria last week with the ASI falling 0.6%. Banking stocks were the major drag on the market with Financials falling 3.17%, volumes were however extremely light. The MPC meeting starts today with the market being fairly mixed with regards to the decision as inflation is currently sitting at 12.9% while the Naira has also come under pressure of late, currently trading at 159 to the USD. The MPR is currently at 12% and we will wait in bated breath for the outcome.