African Thoughts: October 01, 2012

While Nigeria celebrates Independence Day and has the day off today, we look below at the highs and lows of the past week across Africa. The third quarter of 2012 ended once again with some decent volumes going through, particularly in the larger SSA markets. Globally we saw a retraction of some of the gains we had been experiencing recently with most global indices giving back some ground for the past 5 days.

The Good:

Zimbabwe (Mining +2.67%, Industrial +2.51%):

Zimbabwe (Mining +2.67%, Industrial +2.51%): Both Zimbabwe indices gained last week as the same aggressive buyer continues to push prices northwards. Among the heavyweights, Delta closed at an astonishing 78c (+4%), Aico +16.7% to 14c and Econet at 441c (+1.4%). More concerning is that volumes seem to be drying up in Zimbabwe as investors reassess their portfolios in light of the recent large moves. Foreign activity still remains heavily skewed to the buy side. In the Mining index, RioZim gained 17% to close at 65.5c while Hwange gained 5% to close at 19c despite nothing much to note in the fundamentals of these names.

Nigeria (ASI +0.53%):

Nigeria (ASI +0.53%): Another active week in Lagos with the Nigerian ASI gaining 53bps for the 5 sessions. Today is Independence Day in Nigeria and the market is shut but we expect the activities to return tomorrow as Q4 begins. Once again, most of the activity is focused on the Banking sector. Despite the large interest in the sector, banks still closed the week down 92bps, yet for YTD the sector is still up an impressive 45%. The consumer goods sector also showed some weakness closing the week down 51bps yet for YTD it is up a scarcely believable 278%! Some of the notable names that traded up included DangCem (+5.8%), Unilever (+9.35%), AshakaCem (+9.58%), Cadbury (+5.83%) and DangFlour (+10.89%). Losers were led down by Oando (-15.7% - announced proposed rights issue), Flour Mills (-9.2%), Nigerian Breweries (-2.14%) and Access Bank (-8.88%).

Kenya (NSE20 +1.1%):

Kenya (NSE20 +1.1%): Nairobi continued to tick up and touched a 2012 high of 3980 points during the week before retreating slightly to close the week. The larger cap names were the primary reasons behind the market strength with Safcom, BATK and EABL driving the market. Also notable was the return of foreign participation which more than doubled from the previous week as Kenya once again looks attractive. EABL was yet again the most active with some large crosses going through and the name accounting for 39% of the weekly turnover and the name closed up 3.1% at KES233. In the banking sector, Equity bank somewhat frustratingly struggles to follow the rest of the market higher (-1.1%, KES23.25) while KNCB was unchanged at KES27.50 as they announce their search for a new CEO after Oduor-Otieno said he will not renew his contract when it expires in April 2013. Safcom also saw foreign buying drive the name higher 2.5% to close at KES4.10. 2012 Q2 GDP was announced at 3.3% growth which is a slowdown from 3.5% in 11Q2.

BRVM (Comp +60bps):

BRVM (Comp +60bps): A marginal gain in the West African regional bourse with the gains driven by infrastructure (+6.68%), Petroleum (+5.37%) and Tobacco (+3.20%). The individual names that traded up the most were Vivo Energy +8.4%, BICICI +8.1% and SMB CI +7.9%. As always, Sonatel was the most traded stock for the week accounting for 29% of the vols with the name closing unchanged at XOF115,000.

The bad:

South Africa/Namibia:

South Africa/Namibia: The South African and Namibian indices, as is normally the case, tracked each other and global indices. Global markets were mostly soft and SA/Nam were no different. Resources, Golds and Plats were the biggest drags with labor unrest, on-going illegal strike action as well as negative offshore sentiment all pulling the sectors down.

Mauritius Sem7 -1%, Semdex -80bps):

Mauritius Sem7 -1%, Semdex -80bps): Mauritius had a poor week with both indices down. In official announcements, NMH announced no dividend for FY12 due to difficult market conditions. The MPC left the repo rate unchanged at 4.9% after considering both the local and global economy while the Central Statistics Office revised down economic growth from 3.6% to 3.2%. The banking sector was the most active for the week – MCB announced FY12 results after which the counter traded down 1.2% to close at Rs162 while SBM released some good results and a dividend announcement and thus closed up 1.8% at Rs83.50. The hotel sector had a torrid week with NMH, as aforementioned, struggling down 9.1% at Rs55 while Sun Resorts lost 40bps to close at Rs28.30.