African Thoughts: October 14, 2013

Global markets had a rather solid run last week as hopes of an agreement being reached with regards to the U.S debt ceiling emerged. African markets were mixed from both an activity and performance point of view. As per usual, we take a look at some of the best and worst performing markets from across the continent.

Nigeria:

The Nigerian market was rather dull last week from both a performance and an activity point of view with the ASI gaining a marginal 0.18% while turnover fell 2.01% (in $ terms). Banking stocks once again dominated activity with the top-tier banks seeing some pockets of activity throughout the week. Foreign demand continued in consumer stocks as the likes of Nestle and Nigerian Breweries were fairly active. Stanbic IBTC has been appointed as the local custodian of the Nigerian Sovereign Wealth Fund (SWF) by the Nigeria Sovereign Investment Authority (NSIA). The bank’s role as local custodian of the Fund, which is the third largest Sovereign Wealth Fund in sub-Saharan Africa, embraces safekeeping, settlement and other related services for assets in the region of $1 billion. Its appointment will complement NSIA’s appointment of other fund managers for the Sovereign Wealth Fund. Please note that the Nigerian market will be closed on Tuesday and Wednesday of this week due to the Eid celebrations.

Kenya:

It was another solid week in Kenya last week as the NSE 20 Index managed to gain 1.8% with the 5,000 point mark fast approaching. It must however be noted that some profit taking in a few of the big names did start to emerge towards the end of the week. Activity was also on the rise as turnover increased 26% thanks to an increase of foreign investor participation (67%). The bulk of the activity was centered on Safcom as there were a number of large crosses throughout the week, with foreigners dominating both sides of the telco. Foreign demand drove Equity Bank last week as the banking giant witnessed foreign investor inflows to the tune of $2.68m. Foreigners were also behind the strong rallies in both major banking stocks with Equity Bank gaining 5.8% while Kenya Commercial bank gained 3.2%. On the economic front, tax revenue for the first quarter of the 2013/ 2014 fiscal year rose 28% driven by increased levies and enhanced compliance interventions by the Kenya Revenue Authority.

Zimbabwe:

The run in Zimbabwe continued last week with the Industrial Index managing to gain in all five of the sessions with the weekly gain accumulating to 1.99% while the Mining Index came under pressure and fell 3.05%. On the negative side activity decreased with turnover falling 20.4% to $5.9m as foreign inflows fell 78.6%. Blue chip counters drove both activity and performance with the likes of Delta, Econet and OK Zim all being relatively active on select days. Unfortunately from a news point of view, things were rather quite. As selective foreign interest remains fairly high, the recent gains are expected to continue in the absence of any political noise.

Ghana:

The Ghanaian market managed to end the week in positive territory with the GSCE Index gaining 2.08% to close at 2,056.27, taking the year to date gain to a whopping 71.40%. The move higher came on the back of strong moves in the likes of Guinness Ghana, Fan Milk and Standard Chartered Bank. Foreign demand continues in the normally very illiquid market with invest participants preferring to trade in selective blocks.

Mauritius :

It was a fairly solid week in Port Louis from a performance point of view as the Sem-7 managed to gain 0.63% to close at 382.10 (YTD +14.0%). On the negative side, turnover fell 30.9% to $8.32m. The banking sector was rather dull last week as MCB gained 0.6% to close at Rs195.50, but the counter did reach an all-time high of Rs196.00 during the week. SBM and BBCL closed the week unchanged as activity was muted in the names. Interest in hotel stocks continued with NMH gaining 1.9% while LUX gained 0.30%. On the economic front, tourist arrivals increased 8.4% to 71,951 in September 2013 as visitors from China increased by 118.7% to 4,372 visitors.