African Thoughts: October 29, 2012

With the Muslim Eid celebrations last week we had a somewhat quiet week in most African markets. Some of the large markets like Egypt and Nigeria were closed for a couple of days as a result and hence news from around our universe is subdued. Global markets had a slightly soft week with most major indices closing in the red. As always, Africa returned some mixed performance.

Zimbabwe:

After the unbelievable strength of recent weeks in Harare, we finally saw some profit taking in the blue chips last week. Weirdly, the Industrial index had 4 consecutive red sessions (-3.2% for the week) while the mining index had 5 successive green sessions (+4.2% for the week). Overall, market activity was subdued with market activity just $6.97mill for the entire week. The biggest news was Econet announcing their interim results after Thursday’s session, which the market did not seem to like as the name fell 4.2% on Friday on decent size to close at 479.99c. Delta also sold off with profit taking hurting the name, Delta closed down 8.6% at 85c for the week. FMCG conglomerate Innscor also fell, dropping by 5.24% for the week to close at 76c. After the disappointing Econet results, expectations are for slightly weaker results to come out in the upcoming earnings season – we watch with bated breath as to what levels the stocks will now find. In other news, the Zim government has given Hippo Valley Estates (part of Tongaat Hulett) less than 2 weeks to comply with Indigenization laws.

Nigeria:

Lagos was also closed for Thursday and Friday last week. The last trading day was Wednesday which was all about profit taking as Tier 1 and 2 banks all closed in the red and consumers also took a hit during the last session.

Egypt:

It was a short trading week in Cairo due to the Eid celebrations. After a very weak start to the week, the market was little changed for the few days with some positive market sentiment surrounding the news that the Constituent Assembly referred to the High Constitutional Court giving investors a sense of optimism for the political path ahead for the country. Many institutional investors stepped back in as the week progressed. JUFO released their 2012 Q3 results which showed bottom line at EGP120.6mill which is +64.1% for year-on-year and beat most expectations. It ended the last session on Wednesday +2.33% at 6.14.

Morocco:

A strong week in Morocco, mostly due to an unbelievable +21.7% rise in Maroc Telecom for the week. This is mostly on the back of a rumour, seconded in the FT, where Qatar Telecom seems to have interest on buying 53% of Maroc Telecom from Vivendi at a share price of MAD120.

Tunisia:

The market was up 1.74% last week yet that was done in little volume (an average of a bit more than U$D 2 Million traded daily). This performance comes at a time when companies are publishing their Q3 business indicators that in general have been better than last year. There is some concern that investors are affected by the political instability in the country and that such a trend (low volumes + a horizontal market performance) might continue until the next elections.

Kenya:

NSE20 +2.5%. Investors continue to like the Nairobi market with the NSE20 closing up 2.5% for the week while weekly turnover was up 38% to USD31.92m as foreign participation continues to be strong. The banking sector saw strong activity ahead of 2012 Q3 results. KCB was the first bank to release which showed a 46% increase in EPS while Barclays Bank was the week’s top performer (+8.3%, KES15.60). In other news, the Kenyan government introduced rules that all mining companies must sell at least 35% to Kenyans in an effort to promote the interests of local investors.

Mauritius:

Semdex -30bps, Sem7 -30bps. The Semdex and Sem-7 both closed the week down 30bps in a rather uninspiring week. Banks were mixed with MCB -60bps, SBM +60bps and Bramer Banking -2.4%. Hotel stocks were soft with NMH -2.7%, Lux Island -3.2% and Sun unchanged.