African Thoughts: November 25, 2013

Nigeria:

It was a very solid week in Lagos last week from a performance point of view as the ASI gained an impressive 3.60%. There was a noticeable return of foreign interest in the big names towards the end of the week as the likes of Nestle (+6.29%) and Dangote Cement (+4.28%) were two of the star performers. The two large brewers also performed well with Guinness gaining 13.04% while Nigerian Breweries gained 1.04%. Guinness released Q1 results on Tuesday with PAT falling 3.5%. Banks for the most part closed the week higher with the tier-2 space being the outperformers thanks to Diamond Bank (+6.22%) and Skye Bank (+2.56%). Transcorp’s unbelievable run continued as the counter gained a mammoth 61% to close the week at N5.87. In other market news, the Central Bank of Nigeria (CBN) voted to keep the Monetary Policy Rate (MPR) steady at 12% for its 13th consecutive meeting on Tuesday as it formally adopted an inflation target of 6% to 9% for 2014. The CBN also retained the private sector Cash Reserve Ratio (CRR) at 12%, public sector CRR at 50%.

Kenya:

The equity market touched a new high for the year (5,504.21) in Nairobi last week as turnover increased thanks to net foreign inflows of $5.1m. Locals however still dominated proceedings and accounted for 53% of turnover. Safcom was the week’s most active stock and accounted for 28% of turnover. The telco reached a new all-time high (closing) of KES 10.75 (+9.1%). There was strong foreign interest in Kenya Commercial Bank as the name gained 6.5% and edged closer to its 12-month high of KES 49.75. There were impressive gains in the insurance sector with Britam gaining 19.5% while Pan Africa and Liberty Insurance reached new 12-month highs of KES 87 and KES 14.50 respectively. Following a lapse in the amendment to the Alcoholic Drinks Control Act 2010 (ADCA) earlier in the year, when parliament dissolved ahead of the March 2013 elections, senate majority leader has re-introduced the amendments. The Alcoholic Drinks Control (Amendment) Bill, 2013 seeks to restrict the time, place and manner in which manufacturers and distributors promote their products. The government is set to start registration of all Micro, Small and Medium Enterprises (MSME) in the country in a move expected to ease their identification while bidding for public contracts.

Mauritius:

The market closed the week slightly lower in Port Louis last week with the Semdex falling 0.6% to close at 2,038.59 on average turnover of $7.4m with foreigners being net buyers to the value of $702k. The banking sector was a drag on the market with MCB (-0.5%), SBM (-1.0%) and Bramer (-0.7%) all closing in negative territory. The hotel sector closed the week mixed with NMH (-2.3%) and Sun Resorts (-5.0%) coming under some pressure while Lux Island Resorts managed to gain 0.3%.

Zimbabwe:

The market continued to move higher in Harare last week with the Industrial Index gaining 0.36% taking the YTD gain to 42.40%. On the negative side, value traded declined 14.4% to $6.21m on the back of the back of a fall in foreign investor participation. Econet (+2.46%), Natfoods (+2.33%) and Delta (+2.03%) were the main drovers behind the market’s move higher. With the announcement of the fiscal policy for 2014 already expected to be delayed, the ZSE has seen a slow-down in participation from local investors while foreign players have driven much of the activity on the bourse in recent days though their participation was largely confined to the top ten stocks by market capitalisation.

Egypt:

The Egyptian market managed to have another strong week leaving the EGX30 to end the week up +3.66% to close at 6,457.01 points. Market volumes improved significantly, as S&P raised Egypt ratings to B- from CCC+. The UAE and Saudi Arabian announced that they would provide aid worth $9 billion,. The Government stated that the constitution will be finalized before January 2014. The market witnessed a strong week lead by notable buying accumulations from local institutions targeting names such as HRHO, COMI and ESRS, yet it’s worth mentioning that local retail investors ended the week as net-sellers.