African Thoughts: October 21, 2013

It was a shortened week last week with the Eid celebrations closing a number of the Africa markets for at least 1 or 2 days. Kenya is closed today for their Heroes Day. Global markets, and in turn African markets, had a close eye on the debacle going on in Washington. There were some nervous moments although risk returned to global markets in the aftermath of the resolution. Not surprisingly, more buying returned to African markets as well as investors’ appetite for risk came back. There is clearly still fund inflows into Frontier and Africa markets which creates a bid in most of our markets.

Egypt:

The market managed to extend its gains last week sustained by bullish local activity to close at 5,986.80 up 0.93%. Volumes continued to pick-up on an above average turnover for a Sunday of EGP484mn. Institutional investors (mainly locals) managed to continue their positive trading sentiment, targeting the likes of COMI, ESRS, OCDI and HRHO following last session's breakthrough. Also despite local retail mixed sentiment as they ended the day as net sellers yet they managed to aggressively pick-up the likes of OTMT, ACGC and PIOH.

Botswana:

Some chunky crosses took place on the Gaborone bourse with Letshego once again the main recipient of this – local selling and foreign buying. Foreign investors buoyed by solid interim results which came out early in the week.

Nigeria:

The Lagos bourse continues to find strong buying interest from foreign participants as the ASI closed up 95bps for the week. The NSE was closed for 2 days last week due to the Eid celebrations, but when the market reopened the buying continued as investors felt more comfortable after the end of the US government debt debacle. The liquid stocks are all relatively strong and we saw the banks up 1.57% and the Consumers up 2.68% for the week. Consumer stocks were among the strongest performers for the week with Cadbury (+10.4%), Intbrew (+6.5%) and PZ Cussons (+6%) all among the top performers. In other news, we saw PZ Cussons release their Q1 2014 results which at first glance appeared positive.

Zimbabwe:

The Industrials Index bull run finally came to an end late in the week although the index still closed up 32bps. Volumes were much quieter than normal as a lot of noise around policy issues came to the fore, these being (a) ruling party came out with its economic blueprint targeting 9.9% annual growth by 2018, (b) the Indigenization Minister hinted at a possible softer stance regarding the implementation of some empowerment laws. Profit takers came into the large caps as we saw Delta and Econet fall by 1.79% and 1.56% respectively to 137.5c and 63c.

Kenya:

The NSE 20 gained a modest 40bps for the week while turnover also decreased dramatically as foreign participants much quieter than they have been in recent weeks. Once again we saw Safcom as the most active stock with foreign investors on both sides of the counter. There was some early weakness yet the buyers returned as the week progressed with the telco eventually closing up 1.1% at KES 9.10 while we saw EABL fall by 6.5% to KES 315 with foreign selling the main driver. The main banks were mixed with KCB up 1% to KES 49 while Equity Bank fell by 1.4% to KES 35.75.