African Thoughts: October 28, 2013

Global markets had a strong week (for the most part) from a performance point of view with the developed world leading the way higher. African markets ended the week mixed, and as per usual, we take a look at some of the best and worst performing markets from across the continent.

Nigeria:

The Nigerian market managed to close the week marginally higher with the ASI gaining 0.32% to close at 37,461.94. Banking stocks ended the week mixed with First Bank (+0.30%) the only gainer in the Tier-1 space while Diamond Bank (+2.34%) and Skye Bank (+0.22%) were the only stocks that managed to close higher in the Tier-2 banking space. The NSE Oil and Gas was the best performing index week-on-week, advancing by 8.24%, on the back of significant gains on Conoil (N49.15, +49.15%) and Forte Oil (N72.98,+13.50%). Consumers were also a mixed bag with Nestle (+1.06%) and Flour Mills (+1.84%) the only two big names in the sector to close in positive territory. There was a host of Q3 result released last week with Guaranty Trust Bank (PAT +8.6%) and Zenith Bank (PAT +9%) being the big names to report in the banking sector. In the consumer sector; Nigerian Breweries (PAT +6%), Unilever (PAT -13%) and UACN (+49.4%) all reported.

Kenya:

There was some mild profit taking in Nairobi last week as the NSE 20 index fell 0.30% while turnover increased 84% to $52.23m (mainly driven by locals). Activity was buoyed by a large cross in I&M which accounted for 34% of turnover as both the buyer and the seller of the block were local. Market heavyweights Safcom and Equity Bank were amongst the stocks which saw some profit taking with the counters falling 1.1% and 2.1% respectively. Safcom is set to announce H1 2014 performance figures on November 5th while banking stocks are also due to report over the coming weeks. The Kenya Revenue Authority (KRA) will be split into two semi-autonomous entities; the Domestic or Inland Tax Agency and the Customs and Border Control Agency. The aim of the reforms is to make KRA more responsive, efficient and effective in revenue collection, trade facilitation and securing Kenya’s borders.

Zimbabwe:

The Zimbabwean market came under pressure last week ahead of the 2014 national budget with the Industrial Index falling -1.71% while the Mining Index fell -8.46%. Econet, which is set to report results tomorrow after the session was one of the major drags on the market with the telco falling 4.76% to close at 60c. There was also some profit taking in market heavyweights Delta and Innscor which fell 1.82% and 4.49% respectively. On the positive side, turnover increased to $8.05m as foreigners were net buyers to the tune of $1.64m for the week as they were net buyers in the likes of Delta and Meikles. The Zimbabwean Government has unveiled an economic plan dubbed Zim Asset in a bid to try to turnaround the current economic situation in the country. The plan will include various funding options including securitization of resources and reengagement with traditional funders such as the IMF and the World Bank.

Mauritius:

The Mauritian market enjoyed a very solid performance last week with the Semdex gaining 1.3% to close above the 2,000 point mark which was last seen at the start of 2011. MCB (+3.6%) was the main driver behind the surge higher as the banking giant reached an all-time high of Rs203 as foreign demand drove the price. Elsewhere in the banking sector SBM closed the week unchanged while Bramer gained 0.60%. In the hotel sector, Sun Resorts managed to gain 1.1% while NMH gained 0.90%.

Egypt :

The Egyptian market was rather volatile during the course of the week but still managed to close in positive territory with the EGX30 gaining +3.70% to close 6,171.21. Another positive was that turnover increased substantially over recent weeks. The market traded with a notable bullish sentiment which was lead mainly from local investors (retail + institutional) where names such as PHDC, HRHO and COMI witnessed notable buying accumulation, yet small/med caps witnessed some profit taking after the recent surge. It is worth mentioning that ETEL witnessed very strong volumes last week, this comes after an official from Vodafone Group has expressed the company's interest in acquiring the remaining 45% stake currently owned by Telecom Egypt in Vodafone Egypt, the former reached a high at EGP14.99 up 8.38%.