African Thoughts: November 19, 2012

A rather dull week in African markets last week as in general we saw participants content to sit on the sidelines and observe. Indeed, Nigeria turnover on Friday was barely USD7mill, which shows the low activity levels. In general, global markets were in risk averse mode which typically manifests itself in low activity levels in our universe.

Zimbabwe:

Both Zimbabwe indices fell with the Industrial Index down 67bps and the Mining index down a massive 9.44% for the week. The Minister of Finance revised down the Zimbabwe growth forecast for 2012. Initially, the growth had been forecast at 9.4%, this was revised down to 5.6% and has now been further revised down to 4.4%. This was the main contributing factor to the softness on the ZSE. In the mining sector, the year continues to trend down with the Index down a disappointing 27.32% for the year, mostly due to challenging financial times as well as the negative influence of indigenization and empowerment regulations.

Nigeria:

An extremely dull week in Nigeria as foreign investors very quiet with the NSE ASI falling by 1.19%. 5 of the 6 sub-sectors fell with Insurance (+29bps) the only outperformer. Oil and Gas was the biggest faller, dropping 2.65% while Consumers (-1.48%) and Banking (-1.24%) also fell. Some of the stocks that outperformed were Cadbury (+5.67%), Ashaka Cement (+4.94%), International Breweries (+4.31%), PZ Cussons (+1.67%) and Zenith Bank (+1.13%). Among the losers we saw Nestle (-5.03%), Guinness (-4.96%), Glaxo Smithkline (-5.00%), Dangote Cement (-1.18%), Oando (-9.84%) and First Bank (-4.96%).

Mauritius:

It was a busy week in the Indian Ocean island in terms of results publications and dividend announcements. The main index fell by 0.1% while the Sem7 was unchanged for the week. In terms of the banks, Bramer Banking reversed the previous week’s losses by gaining 3.6% while SBM rose by 3.1% to close at Rs82.50. MCB was actively traded by foreign investors yet closed unchanged at Rs162. The hotel sector was particularly hard hit with Sun Resorts falling by 2.9% (on thin volume) and Lux Island Resorts and NMH down by 1.9% and 0.9% respectively. Sugar companies also struggled which saw ENL Land down 2.4% and Omnicane down 1.3% for the week.

Kenya:

The NSE20 closed down 9bps for the week with the Kenyan market the only SSA market bucking the trend with some decent volumes going through. Mumias, Safcom and Co-op Bank were some of the reasons for the drag on the index. Foreign activity was also fairly chunky accounting for roughly 82% of the weekly turnover. The most active name on the week was Safcom which totaled 55% of the weekly activity. The name fell by 3.12% to settle at KES 4.65 as the name corrects downwards on the back of HY2012 results which were released the prior week. The banking sector was incredibly quiet and accounted for just 14% of the weekly turnover.

South Africa/Namibia:

As expected, South Africa and Namibia track global markets and each other. For last week both of these markets were soft with the SA ALSI down 1.4% for the week as the latest catchphrase “fiscal cliff” continues to dominate chatter around the world while the on-going Euro debt issues weighing on participants. The main drags on the SA Index was Resources (-4%), Golds (-7.4%), Plat (-2.9%) and retail (-2.6%).

BRVM:

The BRVM Comp and BRVM10 indices both has strong weeks closing up 6.95% and 6.98% respectively. The sectors that drove this outperformance were:
•  Tobacco (+27.8%): SITAB up 27.8% on low volumes
•  Infrastructure (+10.08%): CIE and SODECI up 14.3% and 6% respectively
•  Telecomms (+5.83%): Sonatel up 12% as investors look favourably on the announcement of the share split due on 23 Nov
•  Beverages (+4.73%): Solibra +15.6% and Unilever CI +4.1% on low volumes
•  Petroleum (+4.6%): Vivo Energy +14.1%
•  Banking (+2.75%): SGBCI +24.2% after recent publication of HY results

Tanzania:

Another quiet week in Dar-Es-Salaam while the DSEI ticked up marginally by 25bps, mainly driven by strength in NMB and Swissport which increased by Tsh100 and Tsh40 respectively.